Indonesia Eyes Up to 5.8% Economic Growth in 2026

6 hours ago 4

TEMPO.CO, Jakarta - The Indonesian government and the House of Representatives (DPR) have agreed on the principles of macroeconomic assumptions for the 2026 state budget in a working meeting today, Monday, July 7, 2025. The government has set the target of 5.2 to 5.8 percent economic growth.

Before the meeting, House Commission XI had formed three working committees on growth, revenue, and deficit. "The committees have reported everything in the internal meeting of Commission XI. Today, we worked on the conclusions," said commission chair Mukhamad Misbakhun at the DPR office on Monday.

After the three committees reported the meeting results, Misbakhun read the conclusion of the agreed macro assumptions. The percentage of year-on-year (yoy) economic growth is agreed upon as per the magnitude in the Macroeconomic Framework and the Principles of Fiscal Policy (KEM PPKF), which is 5.2-5.8 percent.

The government agreed to set the inflation rate y-o-y within 1.5-3.5 percent. The exchange rate of the Indonesian rupiah per US dollar is set in the range of 16,500 to 16,900. The interest rate of the 10-year government securities (SBN) is set at 6.6 percent to 7.2 percent.

After the meeting, Finance Minister Sri Mulyani Indrawati explained that the government and lawmakers also discussed indicators of welfare, such as the poverty rate and unemployment rate.

"Efforts will be made to approach or reach nearly 0 percent extreme poverty rate," she said.

The government also seeks a 4.44 to 4.96 percent unemployment rate in 2026. Meanwhile, the poverty rate is in the range of 6.5-7.5 percent.

Meanwhile, the 2026 State Budget deficit is approved between 2.48 percent and 2.53 percent of the Gross Domestic Product (GDP). "With today's approval, we will later prepare the State Budget Draft and financial statements that will be presented by the President on August 16, 2025," said Sri Mulyani.

Editor’s Choice: Indonesia Faces Widening Budget Deficit, Sri Mulyani Seeks to Use Excess Funds

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