Indonesia Economic Outlook 2026: Strategic Opportunities in a Shifting Economy

The Indonesia economic outlook entering 2026 reflects a period of cautious transition rather than rapid acceleration. Global uncertainty remains a defining backdrop, shaped by geopolitical developments, shifting trade patterns, and tighter financial conditions.  

However, within this environment, Indonesia’s economy has remained relatively stable, although growth momentum continues to vary across sectors. 

As attention turns to 2026, discussions of Indonesia’s economy are increasingly shifting from short-term performance to longer-term fundamentals. For businesses and investors, understanding Indonesia’s economic outlook requires looking beyond headline growth to assess policy direction, investment quality, and sector readiness within Indonesia’s evolving regulatory framework. 

Indonesia Economic Outlook for 2026 

Indonesia’s economic performance in 2025 provides a stable baseline for 2026. Growth remained moderate but consistent, supported by domestic demand, manufacturing recovery, and sustained investment. Key indicators include: 

• GDP growth reached 4.95% in FY 2025, with FY 2026 expected at 4.9%–5.0%. 
• GDP expanded by 5.12% (y.o.y.) in Q2 2025, exceeding earlier expectations. 
• Manufacturing grew by 5.68% (y.o.y.), up from 4.55% in Q1, marking its most remarkable quarterly improvement since 2011 outside the pandemic period. 
• Household consumption, accounting for 52.9% of GDP, grew by 4.97% (y.o.y.), supported by seasonal spending. 
• Investment realization reached IDR 491.4 trillion in Q3 2025, growing 13.9% (y.o.y.), driven mainly by domestic investment. 
• Indonesia recorded a USD 9.67 billion trade surplus in July–August 2025, nearly 195% higher (y.o.y.). 
• Inflation reached 2.65% (y.o.y.) in September 2025, remaining within Bank Indonesia’s target range. 

Overall, Indonesia enters 2026 with a stable growth base, though expansion remains closely linked to investment quality, inflation control, and external conditions.

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Drivers of Indonesia’s Economic Growth in 2026 

Indonesia’s economic growth outlook remains supported by domestic fundamentals, despite global uncertainty. 

Resilient Household Consumption 

Household consumption remains a key stabilizer. Controlled inflation helps preserve purchasing power, while the urban middle class continues to support demand in retail, tourism, and food and beverage sectors. Improved consumer confidence following the political transition also supports spending. 

Investment and Infrastructure Development 

Investment and infrastructure development continue to generate multiplier effects. Toll roads, ports, and mass transit projects are improving connectivity and opening opportunities for local supply chains. Foreign investment in electric vehicles, renewable energy, and downstream minerals further supports medium-term growth.

Natural Resource Downstreaming 

Downstream processing policies are beginning to deliver results. Exports of processed nickel, copper, and value-added palm oil products are performing more consistently than raw commodities, supporting higher domestic value creation. 

Indonesia Industry Outlook: Sectors Expected to Rise in 2026 

Several sectors are expected to show stronger momentum as Indonesia balances consumption-led growth with industrial development. 

Downstream Manufacturing and Processing 

Downstream industries remain central to Indonesia’s industrial outlook as the government continues to push for higher-value-added production. Key areas include: 

• Mineral and metal processing 
• Industrial materials and chemicals 

Electric Vehicle and Battery Ecosystem 

Indonesia’s role in the EV supply chain continues to develop, supported by downstream policies and investment interest. Growth is expected in: 

• Battery materials and components 
• EV-related manufacturing facilities 

Renewable Energy and Energy Infrastructure 

Renewable energy expansion remains gradual but supportive of industrial growth and long-term energy demand. Relevant segments include: 

• Solar and hydropower projects 
• Energy infrastructure for industrial zones 

Logistics and Transportation Infrastructure 

Improving connectivity supports trade and manufacturing across regions, mainly through major transport corridors. Focus areas include: 

• Ports and transportation networks 
• Warehousing and distribution hubs 

Tourism, Hospitality, and MICE 

Tourism recovery increasingly ties to business travel and events, making MICE (Meetings, Incentives, Conferences, and Exhibitions) a sector to watch in selected cities. Opportunities include: 

• Business hotels and convention venues 
• MICE-related services 

Financial and Business Support Services 

As corporate activity expands, demand for enabling services remains steady across sectors. Key segments include: 

• Banking and financing 
• Business advisory and compliance support 

Risks & Challenges to Monitor in 2026 

Despite a relatively stable outlook, several risks remain relevant. 

• Fiscal Constraints: The no-new-taxes policy supports certainty but limits fiscal flexibility and increases compliance focus. 
• Global Uncertainty: Slower global demand and volatility in capital flows may affect exports and investment. 
• Inflation Pressures: Food, energy, and logistics costs require continued monitoring. 
• Policy Execution: Regulatory implementation and administrative delays may affect investment timelines. 

These risks highlight the importance of proper structuring and regulatory alignment. 

Opportunities for Foreign & Domestic Investors 

Indonesia continues to offer fiscal and non-fiscal incentives, particularly within Special Economic Zones and priority sectors. 

Fiscal Incentives 

Fiscal incentives remain a key tool in Indonesia’s investment strategy, especially for capital-intensive and export-oriented projects. 

Corporate Income Tax Incentives 

• Tax holidays of 10–20 years, based on investment value and sector eligibility 
• Tax allowances, including: 
  • 30% reduction of taxable income 
  • Loss carry-forward up to 10 years 
  • Accelerated depreciation and amortization 
• Dividend tax of 10% or lower, subject to applicable treaties 

VAT and Customs Facilities 

• VAT and luxury tax are not collected on eligible goods and services 
• Import duty, import VAT, and import income tax exemptions for approved capital goods and materials 

Non-Fiscal Incentives 

Beyond tax and customs benefits, Indonesia also offers non-fiscal incentives to improve investment execution and operational readiness. 

• Simplified licensing via SEZ administrators 
• The Positive Investment List defines sector openness and ownership rules. 
• SNI is not mandatory for selected activities 
• Environmental and building permits facilitated by developers 
• No export obligation 
• Land use rights of up to 80 years 
• Immigration facilities for investors and executives

Start Your Expansion in Indonesia with InCorp 

As Indonesia moves through 2026, the Indonesia economic outlook reflects steady growth supported by domestic demand, investment activity, and targeted industrial development. For investors, success increasingly depends not only on identifying growth sectors but also on executing market entry with regulatory clarity and operational readiness. 

InCorp Indonesia (an Ascentium Company) supports foreign and domestic investors at every stage of expansion, including: 

• Business Setup Services: Company incorporation, licensing, KBLI alignment, and regulatory structuring under the OSS-RBA framework. 
• Investor KITAS & Immigration Support: End-to-end assistance for Investor KITAS and executive stay arrangements, enabling on-the-ground operations. 
• Ongoing Corporate & Advisory Support: Accounting, tax, corporate secretarial, and compliance services as your business grows in Indonesia. 

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