5.61 Percent Growth Must Be Celebrated with Caution

This article is a column; the entire content and opinions represent the personal views of the author and do not reflect the editorial stance.

Indonesia’s 5.61 percent economic growth amid external pressures should be welcomed as good news.

At a time when the exchange rate is under pressure, global energy prices are fluctuating wildly, geopolitical tensions are rising, and the world economy is moving slowly, Indonesia is still showing resilience.

Domestic consumption is moving, government spending is acting as a cushion, and the services sector is pulsating again. This figure sends an important message: Indonesia’s economy has not yet lost its breath.

However, precisely because the figure looks strong, the way it is read must not be too simplistic.

5.61 percent growth is not a certificate that the economic structure is already healthy. It is more accurately read as a sign that the economy is still able to endure, but at the cost of increasingly expensive policies.

Behind the gleaming figure, there is a more fundamental question: is Indonesia growing because it is becoming more productive, or merely because it is supported by seasonal consumption and state spending?

In economics, the growth figure is an entry point, not a conclusion. High annual growth can hide quarterly momentum weaknesses, changes in calculation bases, or seasonal pushes.

Therefore, 5.61 percent is not enough to be read as evidence that the economy is racing ahead. It must be dissected: who is driving it, which sectors are moving, and whether the impacts are long-lasting.

Salaries, allowances, social assistance, programme spending, and government payments are flowing to households and the business world.

The effects are quickly felt. But the question is: does this spending create new productivity, or does it merely extend short-term purchasing power?

Household consumption also needs to be read carefully. The momentum of Ramadan and Eid al-Fitr usually boosts public spending. Restaurants, transportation, accommodation, retail, and services move faster.

This is positive, but it does not always mean that structural purchasing power has recovered. After the holidays are over, what determines it is real wages, food prices, job quality, household savings, and debt pressures.

Consumption that is alive due to momentum is different from consumption that is strong due to permanent income.

External pressures make this growth not cheap. The weakening rupiah makes imports of energy, food, raw materials, and capital goods more expensive.