Low Inflation and Controlled Deficit, Economists Assess Economic Fundamentals Remain Stable

Indonesia’s economic stability is assessed as still intact, reflected in low inflation rates and a budget deficit remaining within safe limits. This indicator shows that the current macroeconomic conditions are far from the crisis pressures experienced in 1997/1998.

Economic observer Dr. Surya Vandiantara stated that inflation is one of the key indicators for reading the overall economic condition. Based on data from the Central Statistics Agency (BPS), the annual inflation (year-on-year/yoy) in March 2026 was recorded at 3.48%.

This figure is far lower than the inflation during the 1998 economic crisis, which reached 77.63%. “The difference is very significant, exceeding 70%. This indicates that the current economic condition is relatively stable,” Surya said.

In addition to inflation, he also highlighted the position of the State Revenue and Expenditure Budget (APBN) deficit, which in the first quarter of 2026 reached Rp 240.1 trillion. According to him, this figure is still in the safe category and does not reflect excessive fiscal pressure.

Referring to Law No. 17 of 2003, the APBN deficit limit is set at a maximum of 3% of Gross Domestic Product (GDP). Meanwhile, the current deficit realisation is around 0.93% of GDP. “This means that fiscal space is still adequately maintained and has not exceeded the specified threshold,” he explained.

Surya assesses that, in an economic context, a deficit can actually serve as a policy instrument to drive growth, especially through productive state spending.

According to him, a counter-cyclical fiscal strategy is needed to maintain economic growth momentum, particularly amid global dynamics.

“A deficit is not always bad. In certain conditions, it actually becomes a tool to encourage economic activity and increase productivity,” he said.

He added that, in the long term, such productivity improvements have the potential to expand state revenues, thereby covering the occurring deficit.

Looking ahead, Surya believes that determining the deficit limit should not solely be based on the percentage of GDP, but rather consider the feasibility and economic potential of the programmes run by the government.

“If a programme has a significant economic impact and can increase state revenues, then the deficit space can be more flexible,” he stated.