Jakarta, January 27, 2026 – The Europe Today: Indonesia’s Financial System Stability Committee (KSSK) has projected economic growth of 5.4 percent in 2026, supported by strengthening domestic demand despite heightened global financial volatility and persistent geopolitical and trade tensions, officials said on Tuesday.
The KSSK is an interagency body tasked with preventing and managing financial system crises to safeguard national economic stability. It comprises the finance minister, the governor of Bank Indonesia, the chairman of the Financial Services Authority (OJK), and the head of the Indonesia Deposit Insurance Corporation (LPS).
Finance Minister Purbaya Yudhi Sadewa said global market volatility increased in early January 2026, driven largely by ongoing trade disputes and geopolitical frictions that continue to influence global economic and financial conditions. He was speaking at a press conference in Jakarta following a KSSK meeting.
The committee noted that global economic growth in 2026 will remain affected by the lagged impact of U.S. import tariffs and fragile supply chains, even as the U.S. economic outlook improves on the back of increased technology investment, including artificial intelligence, and fiscal stimulus through tax cuts.
Growth in major Asian economies, including Japan, China and India, is expected to moderate in 2026 due to weaker domestic demand and slowing exports, adding to uncertainty in the global outlook, the committee said.
From a financial market perspective, Purbaya said the scope for U.S. Federal Reserve interest rate cuts has narrowed, while U.S. Treasury yields remain elevated in line with the country’s still-sizeable fiscal deficit.
“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 recently revised its global growth forecast to 3.3 percent for both 2025 and 2026 in its January 2026 World Economic Outlook, an upward revision from its October 2025 projection.
Indonesia’s economic growth in 2026 is expected to be driven by rising domestic demand, supported by coordinated policies between the government and KSSK member institutions aimed at maintaining growth momentum and financial stability.
Purbaya added that investment is expected to strengthen further through the role of the Danantara Investment Management Agency in leveraging private sector participation, including in downstream natural resource industries. Efforts to improve the investment climate will also be supported by a dedicated task force to accelerate the implementation of strategic government programs.
