Indonesia's Economy Grows by 5.47 Percent: Why Do People Still Feel the Economic Squeeze?

The author is an employee of the Rupiah Management Implementation Unit at the Bank Indonesia Representative Office in Jember, East Java.

JurnalPost.com - Amid rising living costs, pressure on public purchasing power, layoffs, and global economic uncertainty, Indonesia recorded economic growth of 5.47 percent in the third quarter of 2026. This figure is an increase compared to the previous quarter, which reached 5.29 percent.

This achievement is certainly positive news. Amid various economic challenges, national production, consumption, investment, and trade activities continue to show resilience. The engine of Indonesia's economy remains in motion while a number of countries face growth slowdowns and financial market volatility.

However, behind these encouraging growth figures, an equally important question arises: Why do some people still feel economic hardship when national growth is increasing?

This question does not mean to doubt the validity of economic statistics. Instead, it highlights that economic growth and public welfare are two things that are interrelated but do not always move at the same speed.

Economic growth of 5.47 percent is a measurable macroeconomic achievement. However, such growth does not necessarily reflect the economic experience of all levels of society equally.

Economic Growth Is More Than Just Statistical Figures

Indonesia's economic growth in the third quarter of 2026 was supported by several key components that showed positive development.

Household consumption grew by 5.04 percent, supported by increased public mobility and various economic activities, including the staging of entertainment and sporting events.

On the other hand, government consumption recorded growth of 8.95 percent, driven primarily by employee spending as well as goods and services expenditure. Meanwhile, investment grew by 6.06 percent in line with the realization of government and private capital investment.

Foreign trade performance also made a positive contribution. Exports grew by 4.59 percent, supported by demand from a number of Indonesia's main trading partners.

In terms of business sectors, the manufacturing and trade industries, which are important contributors to the national economy, also showed positive performance.

The resilience of the Indonesian economy is also reflected in the foreign exchange reserve position, which reached 146.8 billion USD at the end of October 2026, relatively stable compared to the previous month's position of 146.3 billion USD.

These foreign exchange reserves are equivalent to financing approximately 5.3 months of imports and are above the international adequacy standard, which generally uses a three-month import benchmark.

This condition provides a buffer for the national economy in facing potential external pressures, including exchange rate volatility and global financial market uncertainty.

Thus, Indonesia's economic growth is not just a number without real activity. Factories continue to produce, construction projects are running, trade is taking place, investments are being realized, and public consumption continues to support the economy.

However, this success needs to be viewed more broadly. The main issue is not just how much the economy grows, but how the results of that growth are distributed and felt by the public.

When the National Economy Strengthens, but Households Remain Under Pressure

Gross Domestic Product (GDP) is an important indicator for measuring a country's economic activity. Through this indicator, the government and the public can see the development of the value-added of goods and services produced in a certain period.

Nevertheless, GDP does not directly describe income distribution, the quality of employment, or the ability of every family to meet their daily needs.

The national economy can experience growth due to increased large-scale investment, industrial expansion, infrastructure development, and government spending.

However, at the same time, some people may still face difficulties in finding work, declining business income, or pressure on household expenses.

This is what can be called the two faces of the Indonesian economy.

At the macro level, growth is increasing, investment is strengthening, consumption remains maintained, and the resilience of the external sector is relatively good. However, at the micro level, the conditions felt by the public do not necessarily show similar improvements.

For example, real household consumption growth of 5.04 percent indicates an increase in aggregate consumption activity. However, that figure does not show that the purchasing power of all groups in society has increased by the same amount.

Some households may increase consumption, while other groups must actually cut spending due to limited income.

The same applies to investment. Investment growth of 6.06 percent is a positive signal for the economic outlook. However, the magnitude of realized investment is not automatically proportional to the number of jobs created.

Investments that rely more on machines, technology, and modern equipment can increase production capacity without requiring large-scale labor absorption.

Therefore, the success of investment should not only be assessed based on the nominal value of capital investment, but also its contribution to the creation of quality jobs, the involvement of local labor, the strengthening of domestic suppliers, and the increase in economic value-added.

High Growth Must Be Followed by Equitable Benefits

Economic growth is an important prerequisite for improving public welfare. Without growth, the space to create new jobs, increase income, and expand business activities will be increasingly limited.

However, economic growth alone is not enough.

A high-growth economy cannot necessarily be called successful if its benefits are only concentrated in certain groups or sectors.

Quality growth should be able to provide wider employment opportunities, increase real public income, maintain the affordability of basic necessities, and strengthen the competitiveness of micro, small, and medium enterprises (MSMEs).

In this context, the equitable distribution of growth benefits is an issue just as important as the achievement of the growth figure itself.

Economic policy should not only be directed at encouraging production and investment activities. Such policies also need to ensure that the results of development can reach low-income people, informal workers, small business owners, and other vulnerable groups.

Thus, the public does not just become part of economic growth statistics, but also gains tangible benefits from the increasing national economic activity.

The Importance of Synergy Between Bank Indonesia and Government Policy

In maintaining sustainable economic growth, Bank Indonesia has a strategic role through monetary, macroprudential, and payment system policies.

Rupiah stability, controlled inflation, adequate liquidity, and a safe and efficient payment system are important foundations for the continuity of economic activity.

Strong foreign exchange reserves also provide additional resilience when the national economy faces external pressure.

However, macroeconomic stability is not the final goal of economic development. Stability must be a foundation for encouraging business activities, expanding employment opportunities, and improving public welfare.

To achieve these goals, a strong synergy is needed between Bank Indonesia's policies and the government's fiscal policy.

State spending needs to be directed productively and precisely, especially toward programs that have the potential to expand employment, strengthen purchasing power, increase productivity, and support the development of the domestic economic sector.

At the same time, monetary and financial system stability must continue to be maintained so that the business world has certainty in making investment decisions and expanding production activities.

This policy collaboration is essential so that national economic resilience does not stop at macro indicators, but is truly translated into improved public welfare.

From Growth Figures Toward Real Welfare

So, what is actually wrong when Indonesia's economy grows by 5.47 percent?

The answer does not lie in the growth itself. Positive economic growth remains an important achievement and is worthy of appreciation.

The problem arises when economic success is only assessed by high growth figures, without paying attention to the quality of jobs, income development, the affordability of living costs, and the equitable distribution of benefits.

Growth of 5.47 percent shows that the Indonesian economy has resilience in facing various challenges. However, this success needs to be followed up by ensuring that growth can be felt more broadly by the public.

Indonesia's challenge going forward is not just to maintain economic growth at a high level, but also to improve its quality and inclusivity.

Because the success of economic development is not sufficiently measured by the figures listed in statistical reports.

That success must also be visible from increasingly open employment opportunities, rising family incomes, the development of small businesses, and the improved ability of the public to meet their daily needs.

Ultimately, meaningful economic growth is not just growth recorded in Gross Domestic Product calculations, but growth capable of bringing hope, opportunity, and real welfare to the dinner tables of the people.