Amid Global Pressures, Eid Becomes Hope for Q1 2026 Economy

JAKARTA – The momentum of Ramadan and Eid al-Fitr 2026 is expected to once again become the main pillar of national economic activity in the first quarter of this year. Increased household consumption, public mobility through the Eid homecoming, and the distribution of seasonal income such as holiday allowances (THR), bonuses, and zakat are driving economic circulation at the start of the year. However, this consumption boost is occurring amid substantial external and domestic pressures. The attacks by the United States (US) and Israel on Iran, along with disruptions to the strategic Strait of Hormuz route, are triggering global energy supply uncertainties. This situation is pushing up Brent crude oil prices, thereby increasing pressure on domestic economic stability amid the seasonal consumption surge. INDEF economist Abdul Manap Pulungan explained that Ramadan and Eid are crucial moments for the economy due to the increased public consumption driven by THR disbursements. “Ramadan and Eid become a seasonal shock on the demand side that boosts household consumption,” said Abdul Manap in his presentation, quoted on Monday (23/3/2026). He also highlighted that the homecoming phenomenon has broad economic impacts. In addition to increasing public mobility, homecoming drives the redistribution of economic activity from major cities to destination areas. Money circulation in regions rises along with increased public consumption, which strengthens the informal sector and SMEs. Abdul Manap noted that the growth of narrow money supply (M1) does indeed increase during the Eid period, but its pace has tended to slow in recent years. This indicates pressure on purchasing power, particularly among lower and middle-income groups. Additionally, extra costs during the homecoming period, such as traffic congestion, rising fuel prices, and transportation expenses, also affect public consumption patterns. On the other hand, inflation dynamics ahead of Ramadan are also a concern. INDEF researcher Afaqa Hudaya recorded that February 2026 inflation rose to 4.76% year-on-year. This increase was mainly driven by administered prices (government-regulated prices) reaching 12.66%, as well as price rises that directly impact monthly inflation.