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Govt cool on business calls for consumer spending stimulus
Industry leaders have urged authorities to boost consumer spending aggressively in response to what they describe as a demand-side crisis reminiscent of the COVID-19 era, but officials say current policies are sufficient to maintain economic activity in the country.
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Fading glory: Only few visitors are seen at the aging Pasaraya Blok M mall in Jakarta on Feb. 1. (JP/Nur Janti)
T
he government is holding back on providing emergency-style fiscal stimulus to invigorate household expenditure even as business leaders claim a lack of spending power is jeopardizing economic growth.
Industry leaders have urged authorities to boost private consumption aggressively in response to what they describe as a demand-side crisis reminiscent of the COVID-19 era, but officials say current policies are sufficient to maintain economic activity in the country.
“We need to focus inward right now,” Indonesian Employers Association (Apindo) chairwoman Shinta Kamdani told reporters on Tuesday. “I’m not saying exports are any less important, but household spending is our largest economic driver, and restoring spending power is our top priority.”
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The national economy grew 4.87 percent year-on-year (yoy) in the first quarter of 2025, its slowest pace in over three years, according to Statistics Indonesia (BPS).
Household spending increased 4.89 percent yoy, or just slightly above overall GDP growth, and accounted for 54.5 percent of total economy growth. Meanwhile, exports shrank 7.53 percent on an annual basis, hit by falling commodity prices and tepid demand from China and the European Union.
“The household consumption growth figure in the first quarter […], even with the Ramadan effect [that should have provided a seasonal spending boost], that’s a red flag,” Shinta added.
