February 4, 2026 | 08:32 pm
TEMPO.CO, Jakarta - The Institute for Development of Economics and Finance (Indef) has stated that great improvements in the investment climate and real sector productivity are necessary for Indonesia's economic growth to surpass the 5 percent mark. This was conveyed by the Head of the Macroeconomics and Finance Center at Indef, Rizal Taufikurahman.
He noted that the primary challenge for Indonesia's economy is not just achieving an annual growth rate, but avoiding the trap of stagnant growth at around 5 percent. "Without serious improvements in the investment climate and real sector productivity, the strengthening seen at the end of the year risks being only temporary and insufficient to support future growth," Rizal said as reported by Antara on Wednesday, February 4, 2026.
Rizal explained that from 2025 through the third quarter, Indonesia's economic pattern focused on maintaining momentum rather than entering a strong acceleration phase. After weakening early in the year, the growth rate returned to approximately 5 percent in the second and third quarters. Compared to 2024, he stated that this performance reflects economic stabilization rather than structural improvement.
For the fourth quarter of 2025, Rizal noted slightly more room for growth compared to the previous quarter. However, he assessed that this increase is more accurately interpreted as temporary strengthening. "Annually, growth in 2025 is likely to increase only slightly and remain around 5 percent, thus not strong enough to be categorized as sustainable economic acceleration," he said.
When tracing the sources of growth, he estimated that the boost at the end of 2025 still leaned heavily on seasonal factors, particularly year-end household consumption and the realization of government spending. "These factors typically support short-term performance, but their sustainability is limited. Meanwhile, components that should support the medium and long term show signals that are not yet fully convincing," Rizal said.
He noted that export performance remains relatively solid and helps maintain growth, but investment has not shown consistent strengthening. According to him, the weakening of Gross Fixed Capital Formation in the second half of 2025 is a signal that growth quality remains fragile and highly dependent on temporary stimuli.
From a business perspective, sectors driven by domestic consumption and mobility have the potential for higher growth in the fourth quarter, following end-of-year seasonal patterns.
Throughout 2025, several service sectors are projected to continue showing positive performance and act as pillars for growth. However, the agricultural sector is considered to play more of a role in stabilizing prices and purchasing power rather than serving as the main driver of aggregate economic growth.
Meanwhile, the most evident pressure, according to Rizal, is seen in the mining sector, whose performance is constrained by the normalization of global commodity prices and production factors. In addition, the manufacturing industry faces challenges due to a lack of strong investment impetus and uncertainty in external demand.
Read: Financial Sector Stable in Q4 of 2025, Says Finance Minister Purbaya
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