JAKARTA - Head of Citi Indonesia Economist Helmi Arman assessed that Indonesia's economic growth prospects in 2026 will be more positive than in 2025. Citibank estimates that the national economy can increase from 5.1 percent in 2025 to around 5.3 percent in 2026, as the policy effects appear to be contradictical.
According to Helmi, monetary easing is the main factor that encourages recovery. After The Federal Reserve (Fed) lowered interest rates, Bank Indonesia (BI) is expected to follow similar steps, including expanding liquidity into the banking sector.
"We estimate that this monetary easing will result in the stabilization of credit growth," he said at a press conference on Citi Indonesia's Economic and Financial Performance Quarter III-2025 in Jakarta, Tuesday, November 18.
Helmi added that the BI benchmark interest rate still has the potential to fall twice again to reach 4.25 percent in the first quarter of 2026, driven by core inflation which is estimated to remain stable and close to the 2.5 percent target. The decline in interest rates is expected to lift back credit growth which is currently likely to slow down.
From the fiscal side, Helmi assessed that the government's increased readiness to reallocate the budget was not absorbed. According to him, the response to fiscal policy is more alert to improve the seasonal pattern of budget absorption and maintain liquidity in the banking sector.
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"This should also be a positive thing for next year," he said.
Despite seeing the opportunity to accelerate growth, Helmi still reminded that the dynamics of the exchange rate and global capital flow could be a challenge. However, fundamentally, Citibank assesses that the current position of the rupiah is at the undervalued level on an average weighted basis with trading partners.
With a combination of monetary stimulus, fiscal flexibility and domestic conditions remain resilient, Citibank assesses that the Indonesian economy has a strong opportunity to enter the rebound phase next year.
"In 2026 we see economic growth will rebound from the possibility of around 5.1 percent this year towards around 5.3 percent in 2026," he added.
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