Regional economic growth in the third quarter of 2026 is projected to remain solid, supported by domestic demand. Household consumption and investment remained resilient across various regions. Exports of major commodities in several regions are projected to improve in line with higher exports of processed copper products from Java and Balinusra, processed nickel products from Sulampua, as well as stronger tourism activity in Balinusra. Meanwhile, exports from Sumatra and Kalimantan were constrained by production and distribution disruptions due to extreme weather. From a sectoral perspective, stronger performance in manufacturing, mining and construction is also expected to maintain regional economic growth momentum. Meanwhile, performance in the agricultural sector remained subdued, particularly in Balinusra and Kalimantan, due to El Nino as well as forest and land fires.
Regional economic growth in 2026 is projected to be higher than in the previous year. The promising outlook is supported by persistently strong domestic demand in most regions. Household consumption is forecast to increase in line with stimulus support and implementation of government priority programs, accompanied by improving investment underpinned by the realisation of various strategic projects, including Danantara projects. Meanwhile, export improvements are expected to be limited by production constraints. By sector, regional economic growth will primarily be supported by stronger construction as well as accommodation and food service activities in almost all regions, alongside trade in Sumatra, Java and Sulampua.
Composite Consumer Price Index (CPI) inflation in the third quarter of 2026 moderated and remained within the target corridor. Nationally, CPI inflation in the third quarter of 2026 was recorded at 3.28% (yoy), lower than the 3.35% (yoy) recorded in the previous period. Core inflation increased modestly, mainly driven by rising gold jewellery prices in line with rising international commodity prices. Meanwhile, volatile food (VF) inflation moderated from 5.58% (yoy) in the second quarter of 2026 to 5.03% (yoy) in the third quarter of 2026. This was supported by maintained food supply, despite pressures from extreme weather (El Nino), which disrupted production in several major production hubs. VF inflationary pressures demand vigilance, particularly in Kalimantan and Sulampua, where inflation is still high. Administered prices (AP) inflation also moderated in various regions, reflecting developments in airfares, despite increases in non-subsidised petrol prices.
CPI inflation in 2026 is projected to remain within the 2.5±1% target range. The outlook is supported by core inflation, which is expected to stay under control in line with anchored inflation expectations, adequate economic capacity, contained imported inflation and the positive impact of digitalisation. Meanwhile, the outlook for VF inflation remains favourable, supported by stronger synergy between Bank Indonesia and the Government through the Central and Regional Inflation Control Teams (TPIP/TPID) in implementing the Inflation Control and Food Prosperity Movement (GPIPS) to control food inflation, including measures to anticipate the impact of weather disruptions on food prices.
Moving forward, economic growth in Indonesia is projected to remain resilient, with further efforts needed to strengthen growth by optimising various sources of economic growth, while maintaining vigilance against global risks. Externally, the impact of geopolitical conflicts and global uncertainty must continue to be monitored and mitigated to maintain domestic economic stability and resilience. Domestically, the growth outlook is favourable, supported by the implementation of various government stimulus programs, improving confidence among economic agents and the optimisation of sources of economic growth. Bank Indonesia will, therefore, continue strengthening its monetary, macroprudential and payment system policy mix in close synergy with government policies to maintain stability, while supporting stronger and more resilient economic growth.
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