Bank Indonesia maintained its benchmark interest rate at 6.25% in February 2026, prioritising currency stability over economic growth. The rupiah has weakened to approximately 16,400 per US dollar, its lowest level since the Asian financial crisis of 1998, driven by capital outflows as the US Federal Reserve maintains higher-for-longer rates. Foreign investors sold approximately $3.2 billion in Indonesian government bonds in Q4 2025.
Economic Fundamentals
Indonesia's GDP grew at approximately 5.05% in 2025, in line with the government's target but below the 7% growth rate that President Prabowo Subianto has set as an aspiration. Inflation has remained relatively well-anchored at approximately 2.8%, within Bank Indonesia's 1.5-3.5% target range. The current account deficit stood at approximately 0.5% of GDP, modest by emerging market standards.
The capital and financial account, however, has been under pressure. Portfolio investment outflows totalled approximately $8 billion in 2025, driven by the interest rate differential with the United States and concerns about the new government's fiscal spending plans, including a free school meals programme estimated to cost $28 billion annually.
Digital Economy
Indonesia's digital economy is one of the fastest-growing segments, valued at approximately $82 billion in 2025 according to the Google-Temasek-Bain e-Conomy report. The country is Southeast Asia's largest digital market by transaction value. Companies like GoTo Group, Sea Limited's Shopee, and Tokopedia (now part of TikTok Shop) dominate e-commerce and digital payments in an economy of 275 million people, of whom approximately 78% are internet users.
New Capital City
Construction of the new capital Nusantara on the island of Borneo continues, though progress has been slower than planned. The government has spent approximately $3 billion on the project, with private sector investment lagging expectations. The capital is intended to relieve congestion in Jakarta, which is sinking at approximately 25 centimetres per year in its northern areas.
For Indonesian economic data, visit Bank Indonesia. For GDP data, see BPS Statistics Indonesia.