Rp 26.34 Trillion Economic Stimulus Deemed Merely a Consumption Buffer

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-semester economic stimulus worth Rp 26.34 trillion could function as a cushion to slow the deceleration of consumption. Generally, according to him, the economic stimulus disbursed 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 per cent of GDP, so its impact functions more as a shock absorber to hold back the slowdown in consumption, rather than being the main driver of economic growth,” Rizal said in Jakarta on Tuesday (23/6/2026). He explained that the current consumption challenges are more structural in nature. The increase in the BI Rate to 5.75 per cent, 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. “Under these conditions, the stimulus helps maintain basic consumption, but it is not yet strong enough to drive a surge in demand,” he said. Even so, Rizal predicts 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. According to him, the most decisive factors are the labour market conditions, real income growth, food inflation, and energy price stability. If employment and incomes do not improve, the room for consumption growth will remain limited. In view of these conditions, according to Rizal, the current stimulus is sufficient to keep 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, accelerated investment, 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 budget of Rp 26.34 trillion. The details include transport incentives of approximately Rp 2.04 trillion, internship and vocational programmes of approximately Rp 6.26 trillion, and food aid amounting to Rp 18.04 trillion.