The Indonesian Business Council (IBC) stated that Indonesia’s economic growth of 5.61 percent in the first quarter of 2026 should be read not only in terms of the headline figure, but also in terms of its sources and sustainability. Achievement in a single quarter is not yet sufficient to demonstrate that the Indonesian economy has entered a new, higher growth trajectory. More structural strengthening is still required, particularly through improvements in business certainty (certainty), the quality of human resources (capability), and capital (capital).
Chief Economist IBC Denni Purbasari, cautioned that the growth in the first quarter of 2026 does not automatically indicate a structural shift in the direction of the economy. “First-quarter growth was significantly supported by the expansion of the Free Nutritious Meals program (Makan Bergizi Gratis/MBG), the development of Red and White Cooperative (Koperasi Desa Merah Putih/KDMP) units, and the low base effect from the previous year due to spending efficiency measures. Therefore, the high growth in this first quarter is not yet sufficient to lead us to the conclusion that the Indonesian economy has entered a new, higher growth trajectory in a sustainable sense,” she said.
The implementation of MBG and the construction of KDMP are believed to be the main reasons why government consumption grew by 21.81 percent (y-o-y), contributing 23 percent to growth in the first quarter of 2026. From the production side, the role of MBG and KDMP is also visible in the growth of the Accommodation and Food & Beverage Services sector (13.14 percent), as well as in the growth of the Construction sector, which rose from 2.18 percent in the first quarter of 2025 to 5.49 percent in the first quarter of 2026.
Household consumption, which accounts for 53 percent of GDP, was the main contributor to growth in the first quarter of 2026. With a growth of 5.52 percent, household consumption contributed 52 percent of the growth in the first quarter. However, the high consumption figure does not necessarily mean that prosperity is increasing evenly. This is because, over the past year, workers’ real wages have only increased by approximately 2 percent after accounting for inflation.
“To make growth translate into improved welfare for many people, the Government needs to support the emergence of new companies in order to create more quality jobs. Only in this way can growth become evenly distributed prosperity that is associated with an improved standard of living for the people,” said Denni.
IBC emphasizes that higher, more sustainable growth requires stronger foundations. Within the IBC framework, this encompasses 3 main prerequisites: certainty, capability, and capital, abbreviated as 3C. Certainty concerns clear rules, consistent enforcement, and predictable policy direction. Capability concerns the skills, health, and adaptability of our human resources, as well as those of Indonesian companies, to compete, adopt technology, and move up to higher-value chains. Lastly, capital concerns the allocation of capital to its most optimal uses. These three elements are deemed necessary to advance in tandem to sustain long-term economic growth.