Indonesia is set to launch a significant economic stimulus package on June 5, 2025, aimed at revitalizing consumption and propelling economic growth to approximately 5% in the second quarter. This initiative comes in response to a reported slowdown, with the economy growing only 4.87% year-over-year in the first quarter, marking its weakest performance in over three years. The government plans to implement these measures ahead of the school holiday season in late June to maximize their impact on consumer spending. Key elements of the stimulus include a 50% electricity discount for 79.3 million households, food assistance for 18.3 million low-income families, cash transfers for low-income workers, and discounted work accident insurance for labor-intensive sectors. Additionally, to stimulate the tourism sector, discounts will be offered on airfare, train and sea transport, and highway tolls during the school holiday period that stretches through mid-July. The total value of the stimulus is still under calculation.
The central bank has adjusted its 2025 growth forecast to a range of 4.6% to 5.4%, acknowledging the need for proactive measures to stimulate the economy. By targeting key areas such as energy, food assistance, and transportation, the government aims to address immediate consumer needs and encourage spending. The timing of the stimulus package is strategic, aligning with the school holiday season when consumer activity typically surges. By offering substantial discounts and financial support, Indonesia seeks to boost domestic consumption, support vulnerable populations, and stimulate economic growth. The government's proactive approach reflects a commitment to fostering a resilient and dynamic economy in the face of recent challenges.