Indonesia launches year-end spending with 30 trillion rupiah stimulus, aims for growth above 5.4%

[JAKARTA] Indonesia has introduced a 30 trillion rupiah (S$2.3 billion) stimulus package for the final quarter of 2025, aiming to push economic growth above 5.4 per cent and sustain the momentum into early 2026.

The package encompasses food aid, expanded housing programmes and nationwide travel discounts designed to spur year-end consumption. Officials said the measures are intended to strengthen household spending and accelerate state Budget disbursement.

Coordinating Minister for Economic Affairs Airlangga Hartarto said on Wednesday (Nov 26) that the government remains confident that fourth-quarter growth in gross domestic product can exceed 5.4 per cent, supported by faster spending and targeted incentives.

“More than 90 per cent of government expenditure has already been absorbed, and we will accelerate disbursements towards (the) year’s end,” he said. Priority outlays include public housing, social protection and infrastructure.

A nationwide travel incentive is among the centrepieces of the package.

Holidaygoers will receive up to 20 per cent discounts on tickets for trains, planes and sea transport during the peak travel season in December and early January.

Officials hope the move will boost domestic tourism and lift activity in hospitality, transport and retail. The government expects around 1.5 million foreign arrivals and more than 100 million domestic trips over the Christmas and year-end holidays.

This is the third round of stimulus in 2025. The inaugural package, rolled out in June with a budget of 24.4 trillion rupiah, aimed to ease pressure on households through transport discounts and wage subsidies.

A second followed in September amid public pressure, following violent demonstrations linked to rising economic hardship. The stimulus offered food aid and temporary tax breaks to workers in tourism-related sectors.

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The cumulative measures come at a critical time for South-east Asia’s largest economy, which is contending with softer global demand, weaker commodity prices and tighter household budgets.

Indonesia’s growth slowed to 5.04 per cent in Q3, down from 5.12 per cent in Q2.

Economists said the latest package could help stabilise middle-class sentiment, which has been strained by slowing job creation and rising living costs.

Fakhrul Fulvian, chief economist at local brokerage firm Trimegah Sekuritas, said the incentives were timely, but needed to be paired with stronger employment growth to deliver lasting benefits.

“I see this consumption-driven stimulus as beneficial for the middle class, but for them to spend consistently, we need economic certainty. That’s why efforts to strengthen job creation must continue,” he said.

Housing support is another major plank of the package. The government is accelerating the construction of more than 5,000 homes for low-income households under a long-term drive to reduce the national housing backlog.

Housing Minister Maruarar Sirait said his ministry will build dozens of vertical housing towers in major cities and coastal regions to expand housing access in densely populated areas.

To further support property demand, the government will extend the value-added tax exemption for homes priced below two billion rupiah into next year. Officials said the incentive has helped sustain home purchases throughout 2025.

The authorities are also exploring coordination with the Financial Services Authority to expand access to subsidised housing loans. One option under discussion is removing problematic credit histories for eligible low-income applicants, potentially widening access to homeownership.