Economist: Government Spending Surge Helps Maintain Economic Momentum in Q1

Economist from the Center of Reform on Economics (CORE) Indonesia, Yusuf Rendy Manilet, said that the surge in government spending in Q1 2026 was carried out to maintain economic momentum so that it would not slow down at the beginning of the year.

According to him, the government seems to have anticipated that global economic pressures are starting to be felt domestically. Where exports are not yet strong, private investment is still constrained, while the Rupiah is also under pressure.

“In a situation like this, fiscal policy is ultimately used to maintain economic momentum so that it does not slow down too much at the beginning of the year,” said Yusuf, quoted on Friday, May 15, 2026.

The report from the Central Statistics Agency (BPS) on Indonesia’s economic growth of 5.61 percent in Q1 2026, noted a surge in government spending of 21.81 percent. This is the highest in the last 10 years, compared to Q1 in previous years.

According to him, this surge in spending was supported by the Eid al-Fitr moment, Eid bonuses (THR), social assistance, and various government programs including the free nutritious meal program (MBG) which has started to run more massively.

This means that the government is playing a major role in supporting economic growth, by increasing total spending. The effect of this decision can be felt in household consumption, trade, transportation, to food and beverages.

“This step is quite reasonable in the current conditions. When the private sector has not yet moved too strongly, the government usually acts as a temporary buffer. If state spending is not accelerated at the beginning of the year, economic growth is likely not to be that high,” said Yusuf.

However, according to him, what the government needs to do is ensure that fiscal space is not too loose, given that the budget deficit at the beginning of the year is already quite heavy.

In addition, considering the temporary effect of the THR stimulus and the Eid momentum, he argued that the real challenge will only be seen after Q1 2026.

In this context, the government is considered to have to ensure that the next growth engine comes from the private sector through investment, exports, or community consumption so that it can truly recover.

“So, I see Q1 as more of an initial push to keep the economy moving amid quite heavy global pressures,” said Yusuf.