The Institute for Development of Economics and Finance (INDEF) predicts that Indonesia’s economic growth could reach 5.1–5.2% year-on-year (yoy) in the first quarter of 2026, driven by Ramadhan and Idul Fitri spending (25/03).

M Rizal Taufikurahman, Head of INDEF’s Macroeconomics and Finance Center, said, "Overall, the Eid momentum is estimated to add around 0.2–0.5 percentage points to first-quarter economic growth."

Early-Year Front-Loading Effect

Rizal explained that because Eid falls early in the year, it creates a front-loading effect, concentrating economic growth in Q1. Household spending is supported by holiday allowances, social assistance, and mobility stimulus, directly increasing household consumption, the largest contributor to GDP.

"Surges in consumption also generate a broad multiplier effect, especially in retail, transportation, accommodation, and micro, small, and medium enterprises (MSMEs), while redistributing economic activity to regions during the homecoming period," Rizal added.

Temporary Growth and Future Risks

However, Rizal highlighted that this Q1 growth is short-term. It does not come with increased production capacity, reflecting higher economic utilization rather than structural improvement.

He said, "Although first-quarter growth may appear strong, there is a risk of normalization afterward. Eid consumption is temporary and seasonal, potentially followed by a slowdown, especially among lower-middle-income groups."

Government Stimulus Supports Economic Momentum

The government targets 5.5–5.6% yoy growth for Q1-2026, fueled by faster state spending, fiscal stimulus, and increased consumer purchasing power during Ramadhan and Eid.

Measures include transport incentives for the homecoming, such as 30% discounts on trains and sea transport, 100% discount on ferry services, and 17–18% airfare reductions.

PHOTO: JATENGPROV

This article was created with AI assistance.

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