Indonesia’s Financial System Stability Committee (KSSK) forecasts economic growth of 5.4 percent in 2026, citing stronger domestic demand despite rising global financial volatility and persistent geopolitical and trade tensions, officials said on Tuesday.
The KSSK is an interagency body responsible for preventing and managing financial system crises to safeguard economic stability, comprising the finance minister, the central bank governor, the financial services regulator chief, and the deposit insurance agency head.
Finance Minister Purbaya Yudhi Sadewa said global market volatility increased in early January 2026, driven mainly by trade disputes and geopolitical frictions that continue to shape economic and financial conditions, speaking at a press conference in Jakarta.
The committee said global growth in 2026 will still be affected by the lagged impact of U.S. import tariffs and fragile supply chains, even as the U.S. outlook improves on technology investment, including artificial intelligence, and fiscal stimulus through tax cuts.
Economic growth in Japan, China and India is expected to slow in 2026 due to weaker domestic demand and exports, the committee said, adding to uncertainty in the global outlook.
From financial markets, room for U.S. Federal Reserve rate cuts has narrowed, while U.S. Treasury yields remain elevated in line with a still-large U.S. fiscal deficit, Purbaya said.
“Uncertainty in global financial markets has also increased, mainly triggered by trade war tensions and a broader escalation of geopolitical risks,” he said.
The International Monetary Fund revised its global growth forecast to 3.3 percent for both 2025 and 2026 in its January 2026 World Economic Outlook, higher than its October 2025 projection.
Indonesia’s economy in 2026 is expected to be supported by rising domestic demand, underpinned by coordinated policies between the government and KSSK member institutions to sustain growth momentum.
Purbaya said investment would be further strengthened through Danantara Investment Management Agency’s role in leveraging private investment, including in downstream natural resource industries, alongside efforts to improve the investment climate through a task force to accelerate strategic government programs.
Related news: Indonesia’s growth outlook draws investors at WEF Davos: Minister
Related news: Bank Indonesia pushes payment system reforms to boost digital economy
Related news: IMF praises Indonesia’s economy, Prabowo sees faster growth
Translator: Imamatul Silfia, Martha Herlinawati Simanjuntak
Editor: Azis Kurmala
Copyright © ANTARA 2026
