Indonesia Eyes 5.5 Percent Q1 Growth on Ramadan Spending Boost

RRI.CO.ID, Jakarta - Indonesia is counting on a seasonal surge in consumer spending during Ramadan and Eid al-Fitr to keep its economic expansion on track in early 2026, even as inflationary pressures are expected to rise.

Indonesian Coordinating Minister for Economic Affairs Airlangga Hartarto expressed optimism that the country’s economic growth target of 5.5 percent in the first quarter of 2026 can be achieved, supported by stronger household consumption during the festive period.

“It seems likely. The government is optimistic about reaching around 5.5 percent growth,” Minister Airlangga said after Eid prayers in Jakarta on Saturday, March 21, as quoted by Antara.

He also highlighted inflation dynamics, which are likely to be higher compared to the same period last year. This is partly due to the absence of a 50 percent electricity tariff discount program that had helped suppress inflation in January-February 2025.

Without the subsidy, household spending on electricity has returned to normal levels, contributing to a statistically higher inflation rate. “Last year there was a 50 percent electricity discount that helped lower inflation. This year, that support isn’t there anymore,” he said.

Despite the anticipated inflationary pressure, the government remains confident that purchasing power and increased consumption during Ramadan and Eid will sustain economic momentum.

The government is targeting first-quarter 2026 economic growth in the range of 5.5 percent to 5.6 percent year-on-year, driven by accelerated state spending, fiscal stimulus, and stronger consumer demand, particularly during the holiday season.

To support purchasing power and boost growth, the government has rolled out an economic stimulus package in the first quarter of 2026.

Measures include transportation incentives for the Eid homecoming season, such as 30 percent discounts on train tickets, 30 percent on sea transport, free ferry services, and 17-18 percent discounts on airfare. The total budget for these incentives is estimated at IDR 911.16 billion from both state and non-state funds.

In addition, the government has distributed food assistance worth IDR 12 trillion to beneficiary families, consisting of 10 kilograms of rice and 2 liters of cooking oil per month for February and March 2026, reaching 35.04 million households.

The government has also allocated IDR 55 trillion for holiday bonuses (THR) for around 10.5 million state personnel, including civil servants, contract-based government employees, members of the military and police, as well as retirees. ***