Prabowo-Gibran Government Prioritizes Economic Stimulus for Middle and Lower Classes

Jakarta – University of Indonesia economist, Fithra Faisal Hastiadi, revealed that Indonesia’s inflation throughout 2024 was at its lowest level since 1958, namely 1.57%. “Although inflation is low, this indicates a slowdown in demand which has been a structural problem for the past five years. The middle class, which is the main driver of the economy, has also experienced a decline in numbers from 57 million to around 47 million,” he explained.

To overcome this problem, the government is strengthening the social assistance (bansos) program and consumption stimulus. “Around 16 million beneficiaries will receive assistance in the form of food, clothing, and rice through this program,” said Fithra.

On the other hand, the government is also focusing on strengthening the production sector by providing labor-intensive incentives. “For five consecutive months last year, the Indonesian Manufacturing PMI was in a contraction phase due to pressure from production costs. With labor-intensive incentives, manufacturing productivity can recover,” said Fithra.

In addition, the government also intervened in the Luxury Goods Sales Tax (PPnBM). “The domino effect of the VAT increase can be avoided because the increase only applies to luxury goods, so it does not have much impact on people other than the upper class,” he explained.

However, Fithra emphasized the importance of selective budget management. “The government must avoid budget leaks and make savings to reduce the potential deficit. Refocusing the budget on more efficient products can help increase short-term economic growth,” he added.

This economic stimulus policy reflects the government’s real steps in facing global economic challenges, while building optimism for more inclusive and sustainable growth. [-red]