A lecturer at the Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada (FEB UGM), Akhmad Akbar Susamto, Ph.D., stated that Indonesia’s target of achieving 8 percent economic growth remains difficult to attain in the near term. Although the national economy remains relatively resilient, he believes it will take considerable time to realize the government’s optimism about reaching the 8 percent growth target. Given current economic conditions, he assessed that government economic policies are still restraining growth, preventing it from accelerating further.
“We all certainly aspire to high economic growth. However, realistically, the 8 percent target remains far from Indonesia’s current structural economic conditions,” he said at the UGM Campus on Monday (Mar. 2).
Akbar explained that Indonesia has achieved 8 percent economic growth four times in its economic history. However, over the past 30 years, national economic growth has not even reached 7 percent.
“In the last 30 years, Indonesia has never again achieved growth of 7 percent or more,” he noted.
Referring to projections from international and national institutions such as the International Monetary Fund (IMF), the World Bank, the Asian Development Bank (ADB), and domestic research institutions, Akbar emphasized that economic growth in 2026 is still expected to hover around 5 percent. As he previously stated, although Indonesia’s economy remains fairly resilient, it is also constrained and unable to grow more rapidly.
“Indonesia’s economy in 2026 is projected to grow at a normal rate of around 5 percent,” he said.
Akbar further explained that Indonesia’s economic growth continues to be supported by household consumption and investment. Household consumption is expected to remain the main contributor to GDP growth from the expenditure side. Although investment tends to fluctuate, he believes it still plays a significant role in driving economic growth.
“The decline in realized foreign direct investment has occurred across many sectors, including mining, chemicals, and transportation, which previously supported investment growth,” he explained.
Meanwhile, the external trade sector is not expected to serve as a growth engine in 2026. According to him, Indonesia’s export value will continue to face pressure from the United States’ reciprocal tariff policies and the weakening of several key commodity prices.
At the same time, Indonesia’s imports are projected to increase, particularly from China, amid global market diversification driven by trade tensions and efforts by partner countries to release excess manufacturing capacity.
What steps should be taken to boost growth? In the short term, Akbar said it is necessary to ensure that every rupiah spent by economic actors generates greater output.
“Every rupiah of government spending must also produce higher output,” he added.
He also highlighted the 2026 State Budget (APBN) posture, which records a deficit of Rp689.1 trillion. According to him, while the budget is expansionary in stimulating economic activity, it is not yet pro-growth, as illustrated by the 20 percent reduction in government capital expenditure. In his view, capital expenditure not only directly stimulates economic growth but also creates a stronger multiplier effect through gross fixed capital formation, increasing production capacity and supporting medium- and long-term growth.
Conversely, although the Free Nutritious Meals (MBG) program contributes directly to GDP, its multiplier effect on economic growth is relatively limited because its economic benefits materialize indirectly and over the long term.
“In the short term, what needs to be done is to design the program so that its multiplier and economic spillover effects can be strengthened,” said Akbar, who also serves as Director of Research in Macroeconomics and Fiscal-Monetary Policy at the Center of Reform on Economics Indonesia (CORE).
Regarding long-term efforts to increase economic growth, Akbar believes the government can expand capital expenditure, accelerate the realization and certainty of investment projects, and encourage high-quality private and foreign direct investment.
This can also be achieved by directing spending and investment toward sectors that reduce economic costs, particularly logistics, energy, and connectivity, restructuring large-scale spending programs, and integrating social and development programs with productivity agendas.
“More important than merely increasing investment or expanding government spending, we need to change the behavior of economic actors through institutional reforms and healthier rules of the game,” he concluded.
Reporter: Kurnia Ekaptiningrum/FEB UGM Public Relations
Author: Agung Nugroho
Post-editor: Jasmine Ferdian
Photo: Infobanknews & FEB UGM Documentation