Indonesia's Q2 GDP growth seen at 4.8% as rupiah weakness bites

JAKARTA, 6 AUGUST 2026 —

Indonesia’s gross domestic product likely rose 4.8% year-on-year in the second quarter, below the psychologically important 5% mark, as a weaker rupiah and higher energy prices crimped demand and raised business costs.

The Institute for Economic and Social Research at the University of Indonesia’s Faculty of Economics and Business (LPEM FEB UI) estimated growth of 4.80% for April-June, with the range between 4.78% and 4.82% according to the Jakarta-based think tank.

The forecast would be down from 5.12% in the same quarter a year earlier, creating a high-base effect that makes it harder to repeat last year’s pace. The Central Statistics Agency is scheduled to release official second-quarter GDP data on Aug 5.

“The economic growth figure in the first quarter of 2026 still raises several questions, but we estimate second-quarter growth will be below 5%,” Teuku Riefky, macroeconomist and financial market economist at LPEM FEB UI, said in the institute’s report.

Seasonal timing also subtracted from growth, Riefky said. Ramadan and Eid al-Fitr fell in the first quarter this year, whereas in 2025 the holidays were in the second quarter and lifted consumption.

External headwinds added pressure. Higher global energy prices and a rupiah that has lost more than 8% against the dollar this year—trading near Rp 18,000 per US dollar—fuelled imported inflation and raised production costs. The currency is at its weakest since the 1998 Asian financial crisis.

Domestic fuel policy added to the squeeze. The government’s increase in the price of Pertamax, a non-subsidised gasoline, raised transportation and other living costs, eroding household purchasing power.

For the full year, LPEM FEB UI expects growth of around 5%, with a forecast range of 4.95% to 5.05%. That projection is broadly in line with international institutions: the IMF and World Bank both forecast 5% growth, while S&P Global Ratings projects 5.1%. The government’s official target is 5.4% in the 2026 state budget, while Bank Indonesia’s forecast spans 4.9% to 5.7%.

For Malaysian companies with rupiah exposure—especially exporters and importers—the weaker currency amplifies earnings volatility and import costs.

Related: Bank Indonesia · Jakarta