Indef considers Eid as a moment for strengthening SMEs and economic circulation
Jakarta (ANTARA) — The Institute for Development of Economics and Finance (Indef) views the momentum of Ramadan and Eid al-Fitr 1447 Hijriah as an important period capable of strengthening SME activity whilst driving national economic circulation through increased public consumption.
Abdul Manap Pulungan, researcher at Indef’s Macroeconomic and Finance Centre, stated in an online discussion monitored from Jakarta on Monday that Eid becomes a significant economic momentum each year due to increased consumer activity, particularly driven by the disbursement of holiday allowances (THR) and mudik (homecoming) travel.
“This Eid moment is one that becomes significant for us each year, especially as an Islamic moment, where this will provide both opportunities and challenges,” said Abdul Manap.
According to him, increased consumption during Ramadan through Eid al-Fitr has the potential to strengthen domestic economic activity and encourage business operators to increase production capacity.
He explained that increased production will have a direct impact on the SME sector due to rising demand for various products and services, ranging from food, retail, transport to other services related to Eid activities.
“This will drive SME activity so that SMEs can move and increase their production capacity. This will ultimately affect the amount of money in circulation during that period,” he explained.
However, he also cautioned that the momentum is accompanied by several challenges, one of which is the potential for inflation increases ahead of Eid, particularly in food commodities and energy due to Middle Eastern conflicts.
He mentioned that food price increases often occur due to limited stocks amid rising public demand during Ramadan.
Another challenge requiring attention is the infrastructure aspect during the mudik period, such as fuel availability, road conditions, and potential congestion that could increase travel costs for the public.
On another front, the global economic conditions still under pressure are also considered capable of affecting domestic economic stability, including exchange rates and public purchasing power.
Nevertheless, the Indef researcher assessed that if the Ramadan and Eid momentum can be managed well, the period has potential to become a major driver of domestic economic activity whilst strengthening SMEs’ role in the national economy.