Facing weakening consumer spending, Indonesia has unveiled a US $2 billion stimulus package for the upcoming Christmas season. The government expects the package to revive domestic demand through subsidies and tax incentives. Measures include discounts on groceries, reduced fares for transport, and tax exemptions on airline tickets.
The stimulus complements a broader support framework. The government has already committed Rp200 trillion (approx. US $12 billion) to shore up state-owned banks and improve credit access. These funds aim to improve liquidity in the financial system and bolster lending to small and medium enterprises.
Economic growth in Indonesia has held near 5%, but forecasts by the IMF and World Bank expect a slowdown to 4.7% in 2025. The new initiative forms part of President Prabowo Subianto’s strategy to reverse downward pressures on growth, particularly by supporting the middle class and alleviating income constraints.
To diversify trade flows, Indonesia has been active on the diplomacy front. It has reduced U.S. tariff liabilities, advanced trade deals with the EU and Canada, and is pursuing membership in the OECD. Finalizing a partnership with the Eurasian Economic Union also features in its plans to widen export markets.
Critics argue the stimulus may only offer short-term relief if underlying structural issues—such as inequality, weak job creation, and global trade risk—are unaddressed. However, with global headwinds mounting, the government has judged that bold fiscal measures are needed now. Markets and households will closely judge whether the Christmas package can arrest the economic slide.
