Economist: Stimulus acts as shock absorber to cushion consumption slowdown

Jakarta (ANTARA) - The head of the Macroeconomics and Finance Centre at the Institute for Development of Economics and Finance (Indef), M Rizal Taufikurahman, stated that the second-half economic stimulus package worth Rp26.34 trillion can function as a shock absorber to cushion the slowdown in consumption. He explained that, in general, the stimulus provided by the government will help maintain household consumption, especially for low-income groups, through food aid, transport discounts, and vocational programmes. “However, in nominal terms, its value is less than 0.1 percent of GDP, so its impact is more as a shock absorber to hold back the consumption slowdown, not as a main driver of economic growth,” Rizal said when contacted by ANTARA in Jakarta on Tuesday. He explained that the current consumption challenges are more structural in nature. The increase in the BI-Rate to 5.75 percent, cost of living pressures, and the slowing purchasing power of the middle class are making households more cautious in their spending. The Consumer Confidence Index in May 2026 also fell to 120.9 from 123 in April, indicating that public optimism is beginning to weaken. “In this condition, the stimulus helps maintain basic consumption, but it is not yet strong enough to drive a surge in demand,” he said. Even so, Rizal estimates that household consumption in the second half of 2026 will still grow positively and remain the main pillar of the economy, although its pace tends to be moderate. He stated that the most decisive factors are labour market conditions, real income growth, food inflation, and energy price stability. If employment and income do not improve, the room for consumption growth will remain limited. Given these conditions, according to Rizal, the current stimulus is sufficient to prevent the economic growth target from weakening further, but it is not yet enough to be a game changer. “The government needs to strengthen it with job creation, investment acceleration, strengthening labour-intensive industries, and support for MSMEs so that people’s purchasing power increases sustainably, not just relying on temporary assistance,” said Rizal. The government is disbursing an economic stimulus package for the second half of 2026 with a total prepared budget of Rp26.34 trillion. The details include transport incentive stimulus of around Rp2.04 trillion, internship and vocational programmes of around Rp6.26 trillion, and food aid of Rp18.04 trillion. Coordinating Minister for Economic Affairs Airlangga Hartarto detailed in a press conference in Jakarta on Monday (23/6) that one of the stimuli provided by the government is the setting of a final Income Tax (PPh) royalty rate of 1.5 percent for writers. The government is also providing various transport discount incentives during the school holiday and Christmas and New Year (Nataru) periods. For the school holidays, the government is providing a 30 percent discount on train tickets from 20 June to 5 July 2026, a 30 percent discount on basic ship fares from 20 June to 15 August 2026, and an exemption from ASDP port service fees from 20 June to 5 July 2026. In addition, the government is providing a 100 percent Government-borne Value Added Tax (PPN DTP) incentive for domestic economy class plane tickets. Meanwhile, for the Nataru period, the government is providing a 30 percent discount on train tickets from 22 December 2026 to 4 January 2027, a 30 percent discount on basic ship fares from 17 December 2026 to 10 January 2027, and an exemption from ASDP port service fees from 22 December 2026 to 10 January 2027. The 100 percent PPN DTP incentive is also being reapplied for economy class plane tickets.