By: Dicky Prasetyo)*
Indonesia’s national economy is currently facing serious challenges, both domestically and globally. Signs of economic weakness are increasingly evident with various indicators showing contraction, ranging from declining Gross Domestic Product (GDP) growth in the first quarter of 2025 to global pressure due to the United States’ protectionist policies. However, amid these challenges, optimism remains. The government, through various stimulus instruments and state spending, continues to strive to maintain people’s purchasing power, strengthen the real sector, and ensure that the wheels of the economy continue to turn.
The Organisation for Economic Co-operation and Development (OECD) has cut its projection for Indonesia’s economic growth in 2025 from 4.9% to 4.7%. This is an important signal that must be answered with adaptive and responsive fiscal policies. The Indonesian government has responded to this challenge by launching various stimulus programs, including providing financial assistance.direct cash, transportation discounts, to optimizing state spending for strategic sectors. All of this is part of the effort to maintain the rate of economic growth to remain in the range of five percent, as targeted.
The Indonesian Employers Association (Apindo) through its Economic Policy Analyst, Ajib Hamdani, identified a significant economic slowdown in the first quarter of 2025. Economic growth was only recorded at 4.87%, lower than the same period the previous year. This is clear evidence that public consumption, which has been the backbone of the Indonesian economy, has declined. The causes include soaring layoffs, increasing poverty rates, low tax revenues, government spending efficiency, and investment concentration in capital-intensive sectors with minimal labor absorption.
However, this challenge was not faced with pessimism. The government responded through various strategic interventions. One concrete form is the economic stimulus program launched in June to July 2025, in the form of transportation discounts for the community during school holidays. This program targets all levels of society through three main modes of transportation, namely trains, domestic planes, and ships, with a total budget of IDR 0.94 trillion. A 30% discount on train tickets for 2.8 million passengers, a 6% government-borne VAT incentive for 6 million domestic plane passengers, and a 50% discount on sea transportation, are direct stimuli that boost mobility and consumption.
According to the Expert Staff of the Presidential Communication Office, Fithra Faisal Hastiadi, this transportation discount policy not only eases the burden on the community, but also becomes a strategic trigger for household consumption and strengthening the creative economy and tourism sectors. With increased mobility during school holidays, the potential of the regional economy is also lifted, creating a significant multiplier effect on the informal sector and employment. Public spending in the leisure sector such as restaurants, hotels, and local tourist attractions is expected to increase, maintaining the stability of economic growth nationally.
In line with this, economist from PermataBank, Josua Pardede, assessed that this consumption-based stimulus has a vital short-term effect. The government has intelligently read the momentum of school holidays as a strategic opportunity to encourage money circulation in the regions. Although external pressures are lurking, domestic household consumption continues to show resilience that can be optimized as a lever for growth. Even in the midst of the reallocation of central government spending, the hotel and restaurant sectors can still maintain their activities through the synergy of community spending facilitated by this stimulus program.
Not only in the form of direct incentives, the quality of government spending is also a major concern. Ajib Hamdani from Apindo reminded the importance of the principle of spending better in government fiscal policy. State spending must be directed to priority sectors such as the creation of quality jobs, food and energy security, and the development of productive infrastructure. Spending that is not on target will only become a fiscal burden without having a real impact on the economy. Therefore, budget planning and execution must continue to be improved so that fiscal efficiency goes hand in hand with the effectiveness of economic development.
Ajib emphasized that productive government spending must support the direction of President Prabowo Subianto’s major policies in Asta Cita, especially related to increasing employment and reducing poverty. Programs such as Direct Cash Assistance (BLT) and stimulus to labor-intensive sectors and MSMEs must be prioritized so that the fiscal multiplier effect on economic growth can be achieved optimally. In addition to maintaining public consumption, the government is also expected to be able to maintain public investment to support medium-term growth.
With these policies, there is confidence that the Indonesian economy can continue to grow at five percent in 2025. This is an important foundation for moving into 2026, where the government is targeting higher growth in the range of 5.2%–5.8%. To achieve this, continuity between fiscal stimulus, strengthening domestic consumption, and efficiency of state spending are key.
Ultimately, amidst global dynamics and domestic structural challenges, government stimulus and spending have proven to be the main drivers in maintaining the rhythm of Indonesia’s economic growth. Proactive, targeted, and welfare-oriented policy steps will determine Indonesia’s success in maintaining national economic stability and sustainability.
)* The author is an economic observer
