Two years into Prabowo Subianto's presidency, Indonesia's GDP grew 5.11% in 2025 and 5.45% in the first half of this year, above the 5% pace seen since 2013, despite a challenging external environment. EIU and CORE economists argue that growth has not translated into stronger household incomes or formal jobs, as upper-class consumption and state-led investment have propped up GDP while private capital spending has nearly stagnated. Bank Indonesia's consumer confidence survey has been declining since early this year, mainly due to weaker sentiment on employment. The 8% growth target has been toned down, while the Indonesia Stock Exchange Composite index has plunged over 40% in 2026 after MSCI warnings about market transparency, and the rupiah has breached 18,000 per US dollar. Permata Bank's chief economist warned that these developments pose “serious threats” to investor confidence.
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