RI's Economic Solution To Grow Back To 5%: The Government Must Spend!

The budget efficiency implemented by the government at the beginning of the year turned out to have a negative impact. The Indonesian economy in the first quarter of 2025 grew below 5% amid global uncertainty due to US tariff policies. 

Member of the National Economic Council (DEN) Arief Anshory Yusuf emphasized that the problem of budget efficiency occurred when people's purchasing power was collapsing, even though purchasing power reflected in household consumption had slowed to below 5% throughout last year. Household consumption was only able to grow by 4.89%. 

The last time household consumption growth grew above 5% occurred in the third quarter of 2023, which was 5.05%. After that, namely in the fourth quarter of 2023 it only grew by 4.47%, the first quarter of 2024 grew by 4.91%, the second quarter of 2024 by 4.93%, the third quarter of 2024 became 4.91%, and the fourth quarter of 2024 by 4.98%. 

"I think this should be a concern because not all elements in the government believe that consumer purchasing power is weakening," said Arief. 

"In fact, the facts have been presented by the DEN starting from the decline in real wages and the increase in the share of defensive consumption spending," he said. 

Therefore, to restore the rate of economic growth in the range of 5% in the remaining quarters of this year, especially amidst the loss of seasonal factors that drive public consumption such as New Year's celebrations, to religious holidays such as Ramadan and Eid, government spending must be revived. 

"I think our attention must immediately be on reversing government consumption," said Arief. 

He also said that the government must immediately complete the draft deregulation policy, which has been mandated by President Prabowo Subianto so that investment can grow rapidly again. This is because investment or PMTB, which is the second largest component contributing to GDP in the first quarter of 2025, only grew by 2.12%. In the fourth quarter of 2024, PMTB growth reached 5.03%, while the first quarter of 2025 was still able to reach 3.78%. 

"Accelerate deregulation so that investment can enter and it is possible that we will propose stimulus to boost household consumption as well," said Arief. 

Distribute Social Assistance 

The government assesses that Indonesia's economic growth in the first quarter of 2025, which is below 5%, was triggered by the global economic slowdown. To accelerate economic growth, the government will start actively distributing social assistance or social assistance to incentives. 

Coordinating Minister for Economic Affairs Airlangga Hartarto assessed that social assistance will be very important in the future to maintain domestic economic activity. Therefore, budget efficiency as has been implemented since the beginning of the year will no longer be implemented in the second quarter. 

Tag: Airlangga Hartarto Arief Anshory Yusuf DEN PMTB