INDEF predicts Eid momentum to drive growth up to 5.2 percent

The head of the Macroeconomic and Finance Centre at the Institute for Development of Economics and Finance (INDEF), M Rizal Taufikurahman, estimates that the Ramadan and Eid al-Fitr period will drive economic growth to 5.1–5.2 percent (year-on-year/yoy) in the first quarter of 2026. “In aggregate, the Eid momentum is estimated to add around 0.2–0.5 percentage points to first-quarter economic growth,” Rizal said when contacted by ANTARA in Jakarta on Wednesday. He explained that the Eid period falling at the beginning of the year creates a front-loading effect, concentrating growth acceleration in the first quarter. According to him, the increase in public spending is supported by the disbursement of holiday allowances (THR), social assistance (bansos), and mobility stimuli, which directly boost household consumption as the largest contributor to gross domestic product (GDP). “This consumption surge also generates a fairly broad multiplier effect, particularly in the retail, transportation, accommodation, and micro, small, and medium enterprises (MSME) sectors, as well as encouraging the redistribution of economic activity to regions during the homecoming period,” he added. However, Rizal highlighted that the nature of the growth boost in the first quarter is relatively short-term. This is because the push is not accompanied by increased production capacity, thus reflecting higher economic utilisation rather than fundamental improvements. “Although first-quarter growth has the potential to appear strong, there is a risk of normalisation in subsequent periods. Eid consumption tends to be temporary and based on seasonal factors, potentially followed by a slowdown after the holidays, especially among lower-middle income groups,” Rizal explained. Therefore, he said, it is important for the government to strengthen more structural sources of growth, primarily from investment and exports, to ensure sustainable economic growth. “Therefore, strengthening more structural sources of growth is crucial so that economic performance is not only strong cyclically but also solid in the medium term,” he stated. Meanwhile, the government targets national economic growth in the first quarter of 2026 to be in the range of 5.5 to 5.6 percent (yoy). This target is driven by accelerated state spending, fiscal stimuli, and strengthened public purchasing power, especially during the Ramadan and Eid al-Fitr period. To maintain public purchasing power and stimulate economic growth, the government has launched an economic stimulus package in the first quarter of 2026. One of them is transportation incentives for Eid homecoming in the form of a 30 percent discount on train tickets, 30 percent on sea transport, 100 percent on ferry services, and 17–18 percent off on flight tickets.