Taking valuable lessons from the events of 2025, the government and the business world are united in activating all engines of growth in 2026. With an expansive state budget and improvements in the business climate, high growth is no longer just a dream if each engine moves in sync with the same goal, which is to increase economic capacity, not just spending power.
Finance Minister Purbaya Yudhi Sadewa acknowledged that the economy in 2025 experienced a significant slowdown from the beginning of the year until the end of September. However, with fiscal policy intervention and synergy with Bank Indonesia, economic recovery in the fourth quarter began to gradually recover as a foundation for next year's growth.
However, Purbaya did not deny that the impact of liquidity injections into the banking sector has not been as optimal as expected due to a lack of synchronization in policy at the outset. Closer coordination between fiscal and monetary authorities is expected to resolve this issue completely.
"Going forward, with increasingly synchronized policies between us and the central bank, our economy will grow better than it is now. In 2026, achieving 6% growth, as I mentioned earlier, should not be too difficult, especially since the growth target for the fourth quarter is still 5.5% and the overall target for 2025 is 5.2%," said Purbaya in a media briefing in Jakarta on Wednesday (12/31/2025).
Starting in 2026, in addition to accelerating fiscal spending and strengthening communication with the Board of Governors of Bank Indonesia, one of the government's commitments is to expedite the meeting of the Task Force for the Acceleration of Government Strategic Programs (P2SP), which was previously held on Tuesday (12/23/2025).
With targeted business obstacle hearings held once a week, the government can gain a clearer picture of the problems often faced by businesses in the field and create a more conducive business climate in the future.
"I am confident that if this is done consistently, the investment and business climate will improve. We will detect disruptive regulations early on and fix them as soon as possible," concluded Purbaya.
Closing 2025, the Coordinating Ministry for Economic Affairs summarized Indonesia's economy as a year of stable growth amid uncertainty.
Despite the global economic dynamics that are still shrouded in uncertainty, Indonesia's economy throughout 2025 continues to show resilience and solid performance. The government continues to ensure macroeconomic stability is maintained and encourages quality, inclusive, and sustainable economic growth.
"Throughout 2025, the government consistently maintained national economic stability, one of which was through strengthening coordination of policies across ministries and institutions, so that Indonesia's economy continued to grow solidly amid global challenges," said Haryo Limanseto, spokesperson for the Coordinating Ministry for Economic Affairs, in a press release on Wednesday (12/31/2025).
Previously, at the Bank Indonesia Board of Governors' Meeting (RDG BI) in mid-December, BI Governor Parry Warjiyo said that overall, economic growth in 2025 is predicted to be in the range of 4.7%–5.5%. The economy is expected to increase to 4.9%–5.7% in 2026.
Moving forward, various efforts need to be pursued to encourage higher economic growth while maintaining stability.
"In this regard, Bank Indonesia continues to strengthen its policy mix through the reinforcement of monetary, macroprudential, and payment system policies that are closely aligned with the government's fiscal stimulus and real sector policies to promote higher and more sustainable growth," Perry said.
Six prerequisites
The business community appreciates and supports the Minister of Finance's optimism in boosting economic growth to 6%, especially with the regulatory easing efforts that will be promoted. The 2026 State Budget target of 5.4% growth is still in line with conservative estimates of continued positive growth, but is cautious at around 5.0%-5.4%.
However, Indonesian Employers Association (Apindo) Economic Policy Analyst Ajib Hamdani emphasized that there are six strategic prerequisites that must be given top priority and immediately fulfilled in order to achieve Indonesia's economic growth in 2026, moving towards an inclusive, productive, and competitive model.
First, the creation of quality jobs. Ajib emphasized that government policies must be based on the same spirit, namely labor absorption.
"Because the fundamental problems in Indonesia are unemployment and the informal sector, which are an economic burden, investment needs to be directed towards sectors that significantly absorb formal labor. The government also needs to prevent turnkey investment, especially for lower-level positions, by applying clear and consistent local labor ratios," explained Ajib in a written statement received by SUARon Thursday (01/01/2026).
Second, the mix of fiscal and monetary policies. 2025 is a year of transition for Indonesia's leadership model and fiscal policy, which previously emphasized stability and is now shifting toward growth. Ajib believes that this fiscal policy style is very much in line with President Prabowo's goal of more aggressive economic growth toward Indonesia Emas 2045.
"However, the problems faced are limited fiscal space, tax revenue shortfalls, and the inefficiency of state-owned enterprises (SOEs), which are expected to be engines of growth and healthy budget engines. The government must prioritize the principle of collecting more and spending better. Monetary policy must be careful to keep inflation in the range of 1.5%–3.5%," he said.
Third, universal business cost efficiency must be a key structural agenda item and requires strong government commitment, with priorities including reducing the cost of compliance, more competitive financing, and controlling energy, logistics, and labor costs.
Fourth, improving the productivity and quality of human resources by strengthening the link and match between the business and industrial worlds and the world of education. Vocational reform measures, reskilling and upskilling, and strengthening digital literacy are prerequisites for the workforce to be able to adapt to an increasingly technology-based economic structure.
"Demands for wage increases, which are always a recurring issue for employees, must be balanced with increased productivity and competitiveness. Remember, economic competition is not between Jakarta and West Java, nor between Central Java and East Java, but rather global competition between Indonesia and Malaysia, Indonesia and Vietnam, Indonesia and China, and other countries that continue to increase their productivity," Ajib emphasized.
Fifth, empowering UMKM the supply chain. Structured and mutualistic partnerships between state-owned enterprises and the private sector, appropriate fiscal incentives, and strengthened access to financing and markets will encourage UMKM the ladder and integrate into the global value chain. Sixth, continuity of active participation by the business world through responsive collaborative mechanisms, with policy feedback loops.
The business world always opens up dialogue so that policies are based on business realities. "This spirit is in line with Apindo's vision, namely Indonesia Incorporated. These six prerequisites are an important foundation for accelerating economic growth in 2026. Economic growth of 6% is possible, but economic growth of 5.0%-5.4% is more achievable," concluded Ajib.
Boost economic capacity
Sharing his views with Ajib, Bank Permata Chief Economist Josua Pardede believes that if government spending really stops at around 82.1% as announced in the December 2025 KiTA State Budget, a growth scenario of around 5% becomes more reasonable because state and regional spending will not be maximized.
Josua reminded that the problem is not only the amount of central government spending, but also its quality and distribution. As of November 30, central government spending was only 79.5% of the second semester projection, and capital spending was relatively low compared to other components.
"In the regions, TKD is already high, but APBD spending is still contracting and local government funds in banks are still large. This weakens the multiplier effect of spending on the economy because the money has not actually been spent on goods, services, or projects that create economic activity," Josua explained to SUARon Thursday (12/18/2025).
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Josua reminded that with a more expansive fiscal stance this year, there are five points for the Minister of Finance to consider in ensuring that the expansion truly boosts economic capacity, rather than merely increasing spending.
First, accelerate spending from the beginning of the year and streamline absorption management so that it does not pile up at the end of the year, because delayed spending will be less effective in driving growth and may compromise quality.
Second, ensuring productive spending that boosts investment, productivity, and supply resilience, while protecting purchasing power through targeted programs.
"The portion of priority programs that directly affect the community is quite large, including social assistance and household income protection programs. The challenge is to ensure accuracy in targeting, integration of recipient data, and continuity of funding so that the impact is stable, not just a temporary spike," added Josua.
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Third, encourage regional spending to be in line with national growth objectives. Since transfers are already relatively high but regional budget spending is weak, it is necessary to strengthen incentives and monitoring of absorption, including transfer designs that further encourage regional capital spending and accelerate procurement.
Fourth, on the revenue side, focus on strengthening the base and compliance as well as securing revenues from leakage, so that fiscal expansion does not rely entirely on financing.
Fifth, maintain financing credibility through careful planning of securities issuance and prudent use of government cash reserves to ensure that financing costs remain efficient, as expensive financing ultimately limits productive spending.
"If these measures are implemented in an integrated manner, then next year's expansionary fiscal space will have the opportunity to be more effective in driving growth, while maintaining fiscal health and economic resilience," Josua concluded.
