Antara News·Indonesia·Monday, October 5, 2026 at 07:36 AM UTC

Three indicators signal stronger Indonesian economy: Govt

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Bayu, Kenzu

Jakarta (ANTARA) - The Indonesian government assessed that country's economy is showing positive developments heading into the fourth quarter of 2026, reflected in the strengthening of three economic indicators.

The three indicators are September 2026 inflation, the August 2026 trade balance, and the September 2026 Purchasing Managers' Index (PMI) for manufacturing, released on Thursday (Oct 1).

In a statement here on Monday, a Coordinating Ministry for Economic Affairs Spokesperson Haryo Limanseto said September 2026 inflation was recorded at 3.28 percent year-on-year (yoy), still within the national target of 2.5±1 percent or 1.5-3.5 percent.

Core inflation eased to 2.84 percent (yoy), while administered prices inflation fell to 3.25 percent (yoy), influenced among others by the normalisation of mobility after the school holidays and the relatively limited impact of non-subsidised fuel oil price adjustments.

"The volatile food component remains a concern, with inflation of 5.03 percent (yoy), influenced by demand dynamics and a decline in production of several horticultural commodities due to extreme weather, El Nino, and natural disasters," Limanseto explained.

He added the government continues to strengthen central and regional coordination to maintain supply, smooth distribution, and price affordability, especially ahead of year-end.

To maintain purchasing power, the government is strengthening the Family Hope Program (PKH) Phase III, providing 10-kilogram monthly rice aid for October-December 2026, and accelerating the Food Supply and Price Stabilisation (SPHP) programme for medium-grade rice through state logistics agency Bulog.

The efforts are complemented by an affordable food movement (GPM), optimisation of government rice reserves (CBP), and inter-regional cooperation (KAD).

On the external side, Indonesia's trade balance recorded a cumulative surplus of US$7.25 billion during January-August 2026.

Export performance in January-August 2026 was supported among others by iron and steel at US$19.18 billion, up 4.88 percent, crude palm oil (CPO) and its derivatives at US$17.75 billion, up 6.57 percent, and coal at US$16.58 billion, up 4.31 percent.

Manufacturing exports also grew 6.62 percent, reflecting the contribution of downstreaming to export performance.

On the import side, raw or auxiliary materials and capital goods dominated at US$133.38 billion and US$6.74 billion respectively or a combined 91.3 percent of imports.

The increase in imports of machinery or mechanical equipment by 15.26 percent and electrical machinery or equipment by 22.94 percent indicates rising demand for production inputs and capital goods, in line with domestic production and investment activity.

Furthermore, the third economic indicator, as stronger manufacturing activity, is reflected in the September 2026 Manufacturing PMI rising to 52.4 from 49.8 in August. The signals the PMI's return to the expansion zone.

Limanseto explained the improvement was supported by increases in new orders and production, export order growth, the entry of new projects, and stronger purchasing power.

In September 2026, new orders grew at the fastest pace since February 2026, while export orders recorded the fastest growth since May 2022.

"Going forward, government policy will continue to be directed toward maintaining purchasing power, encouraging investment and production, and improving the competitiveness of national industry," Limanseto said.

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