Arnoldus Kristianus, Jakarta – Many economists believe Indonesia's economy is stagnating or deteriorating, according to the latest survey released by the Faculty of Economics and Business, University of Indonesia.
The Economists Survey for the First Half of 2026, which polled 85 economists, found that 48% of respondents believe the current economic situation has worsened compared with the previous quarter. Another 38% see no improvement or decline, while only 14% believe conditions have improved.
"Overall, the survey shows a cautious outlook among experts. Most respondents believe the economy has either deteriorated or remained stagnant, with inflationary pressures becoming a growing concern," the report said.
Data from the Central Statistics Agency showed monthly inflation reached 0.68% in February 2026. Annual inflation stood at 4.76%, while year-to-date inflation was recorded at 0.53%. The latest price pressures were largely driven by rising food costs.
The findings are consistent with earlier surveys conducted in October 2024 and March 2025, suggesting that economists' concerns about Indonesia's economic performance have persisted across three consecutive surveys over the past 18 months.
Rahma Gafmi said economists see serious constraints in Indonesia's growth engine. Rising food prices and global energy costs have begun eroding household purchasing power, she said.
At the same time, a tightening labor market has slowed wage growth and household income expansion.
"There are signals that the government wants to minimize the role of the private sector, which could worsen the business climate and potentially hold back investment expansion," Rahma said on Sunday.
She added that the government now faces a major challenge in proving that its economic growth target of 5.4%-5.6% can be achieved.
Three policy recommendations
Rahma said the survey suggests economists remain uncertain about whether current policies are addressing the root causes of economic challenges.
One concern is the large budget allocations for new programs that were expected to generate multiplier effects in the real economy but have instead been absorbed by short-term consumption.
"Persistent pessimism over the past 18 months suggests structural bottlenecks in our economy," Rahma said. "The issue is no longer waiting for the storm to pass, but fixing the ship so it can move faster."
If stagnation continues, she said the government must intervene to address structural issues and weakening middle-class purchasing power, which has been a key driver of domestic consumption.
One recommendation is delaying planned increases in value-added tax to prevent deeper declines in household spending.
Rahma also urged policies to support businesses and prevent waves of layoffs. The government, she said, should intervene in port and transportation costs – areas largely controlled by the state – to offset rising global energy prices.
She further called on Bank Indonesia and the Financial Services Authority to ease risk-weighting requirements for loans to export-oriented manufacturing firms and small and medium-sized enterprises involved in import substitution.
Finally, Rahma stressed the importance of maintaining market confidence through consistent policy communication.
"Uncertainty over the government's fiscal direction amid high oil prices is often more frightening for investors than the size of the state budget deficit itself," she said.