MacroInsight  /    Click here for full PDF version 
 Author(s):   Kefas Sidauruk 

• GDP grew +5.29% yoy in 2Q26, driven by investment acceleration that offset softer household and government consumption.
• Service sector continued to outpace goods-producing sectors as manufacturing slowed to +4.5% yoy, consistently underperforming GDP.
• We expect 2H26 growth to slow further on gov't spending decline and headwind to the purchasing power; we maintain FY26 forecast at +5.20%.

2Q26 GDP growth slowed to +5.29% yoy, but still beat expectations
GDP growth eased slightly to +5.29% yoy in 2Q26 from +5.6% yoy in 1Q26, though still beating consensus (5.14%) and our estimate (5.18%). Investment (Gross Fixed Capital Formation) accelerated to +6.9% yoy (1Q26: +6.0% yoy), while household and government consumption slowed to +5.1% yoy (1Q26: +5.5% yoy) and +16.0% yoy (1Q26: +21.8% yoy), respectively. Net exports remained a drag at -20.0% yoy (1Q26: -21.3% yoy) as import growth (+8.8% yoy) outpaced exports (+4.1% yoy).
Investment acceleration was offset by slowdown in consumption
Investment strength was driven by two areas: 1) +6.6% yoy growth in buildings, an 8-year high, and 2) +26% yoy growth in vehicles, also at 5-year high. These investment drivers were reflected on the supply side, where construction grew +6.7% yoy and trade grew +6.4% yoy. On household consumption, only housing & equipment (+5.1%) and health & education (+5.3%) accelerated in 2Q26, while other categories slowed. The largest sub-category, food & beverage (non-restaurant), softened to +4.2% yoy (1Q26: +4.5%) reflecting post-Lebaran normalization. From the public sector, government consumption was driven by individual consumption (+33.3% yoy), a category reflecting household-oriented spending (e.g., free meal program, KDMP ). Government collective consumption (e.g., defence, law enforcement) grew +5.4% yoy but still accounted for 56% of total government consumption. This gov't spending composition was also reflected on the supply side, with food services and accommodation sector grew +10.6% yoy.
Service sector was leading the overall growth
Service-producing sectors continued to lead, growing +6.3% yoy (1Q26: +6.7% yoy), while goods-producing sectors slowed to +3.9% yoy, dragged by mining's (-1.6% yoy) which marked fourth consecutive quarter of contraction. Notably, service-producing sectors' real GDP first exceeded goods-producing sectors in 1Q25 and has remained ahead since - a structural shift in Indonesia's economic composition. Manufacturing, the largest goods-producing sector, grew only at +4.5% yoy -- undershooting overall GDP for the past year. Within manufacturing, basic metals underwent a significant slowdown: after averaging +14.5% yoy per quarter between 2023-25, the sector slowed to +3.8% yoy in 1Q26 and barely grew at +0.7% yoy in 2Q26.
Expect softer GDP in 2H26, FY26 forecast maintained at c.+5.2%
We expect GDP growth to slow further in 2H26 as government spending faces high base effects as spending is more evenly distributed across quarters in 2026 and should see contraction by 4Q26. Household consumption comes under pressure from higher food prices and the fading government consumption tailwind. To partially offset consumption pressure, the government is planning to distribute ~US$1bn worth of rice (997K tonnes) to 33.2mn families to dampen food inflation impact and support purchasing power. Taking this into account, we maintain our FY26 GDP growth forecast at +5.20%.


Sumber : IPS