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Government To Boost Purchasing Power To Drive Economic Growth In Q2-2025

The Central Statistics Agency (BPS) reported that Indonesia's economic growth in the first quarter of 2025 only reached 4.87% year-on-year (yoy). 

This economic growth is lower than the fourth quarter of 2024 which grew 5.02% yoy, and also lower than the first quarter of 2024 which recorded growth of 5.11% yoy. 

Coordinating Minister for Economic Affairs Airlangga Hartarto said that to encourage higher economic growth in the second quarter of 2025, the government will issue policies that focus on increasing purchasing power, economic stimulus, encouraging investment, and accelerating government spending. 

As is known, one of the causes of slowing economic growth is because government consumption contracted by 1.35% yoy in the first quarter of 2025. 

In addition, household consumption in the first quarter of 2025 also grew slowly to 4.89%, compared to the fourth quarter of 2024 of 4.98%, and the first quarter of 2024 which reached 4.91%. 

To maintain purchasing power, Airlangga said, the government will distribute social assistance (bansos) PKH and Sembako Cards in May-June 2025 as well as the disbursement of the 13th ASN Salary. 

"The disbursement of the 13th salary and the distribution of bansos are expected to provide a stimulus for the national economy, especially in encouraging household consumption," said Coordinating Minister Airlangga. 

The government is also providing fiscal incentives in the property, automotive, and labor-intensive sectors, as well as maintaining food price stability. 

To encourage investment, the Government has formed a Task Force for Employment Expansion, simplified licensing through the Presidential Instruction on Deregulation, Completed the Revision of the Presidential Regulation on BUPM (Investment Business Sector) and implemented Investment Credit for Labor-Intensive Industries, optimized BUMN Capex (capital expenditure), and optimized the distribution of KUR (People's Business Credit). 

"We are committed to continuing to improve the investment climate through deregulation and simplified licensing. We also encourage the implementation of Investment Credit for Labor-Intensive Industries to create new jobs," explained Airlangga. 

Furthermore, he revealed that the acceleration of government spending is the main focus with an absorption target that can be higher than its quarterly cycle, to encourage a multiplier effect on growth. 

The government also continues to mitigate risks related to the Trump 2.0 policy and the expansion of export markets through tariff negotiations with the United States and the completion of the EU-CEPA cooperation. 

"Indonesia's joining BRICS and accession to the OECD shows our commitment to strengthening our position in the global economic arena. This will support long-term economic transformation towards Advanced Indonesia," concluded Airlangga. 

Tag: Airlangga Hartarto BPS Central Statistics Agency Economic Growth In Q2-2025