Fitch projects Indonesia’s 2026 growth at 5.2%, below budget target
The rating agency expects growth of 4.9% in 2027 and 2028, saying structural reforms will have a limited impact on productivity and capital deepening.
Fitch Ratings expects Indonesia’s economy to expand by 5.2% in 2026, short of the 5.4% target approved by the government and parliament in the national budget. The agency attributed its forecast to weaker growth momentum in the second half of 2026.
Fitch anticipates less fiscal support after the government accelerated spending in the first half. It also expects net exports to weigh on economic growth.
For 2027 and 2028, the agency raised its growth forecasts from 4.7% to 4.9%. That remains below the government’s medium-term ambition of 8%, reflecting Fitch’s assessment that structural reforms will deliver only limited gains in total factor productivity and capital deepening.
Under its baseline scenario, Fitch said achieving 8% growth while preserving macroeconomic and financial stability would be difficult without substantial additional reforms and the creation of quality jobs.
The agency also highlighted policy uncertainty and concerns about the consistency and credibility of policymaking as decision-making authority becomes more centralised. Those risks contributed to its decision in March 2026 to revise Indonesia’s sovereign rating outlook from Stable to Negative.
Fitch said swift measures to support the rupiah and the rapid appointment of a new central bank governor had eased pressure. It viewed the 2027 budget as signalling policy continuity, but warned that fragile investor sentiment and continued foreign-exchange intervention could put further strain on reserves.
