Indonesia commenced the implementation of a $1.5 billion stimulus package on Thursday, designed to invigorate consumer activity after Southeast Asia’s largest economy recorded its slowest growth in over three years during the first quarter.
The archipelago nation’s economy expanded by 4.87 percent year-on-year in the first three months of 2025. This sluggish rate for the developing country had not been observed since the COVID-19 pandemic in mid-2021. President Prabowo Subianto has faced criticism for his economic policies, notably a $19 billion cut from the government budget to establish a new sovereign wealth fund.
The newly introduced stimulus measures encompass discounts on train, plane, and ferry tickets, alongside toll subsidies aimed at bolstering tourism. The government will also disburse additional social aid, provide cash transfers to low-income workers, and offer discounts on unemployment insurance premiums.
A finance ministry spokesperson confirmed to AFP that the program would come into force on Thursday, following the initial announcement earlier in the week. Finance Minister Sri Mulyani Indrawati stated on Monday that the package, with incentives active during the school holidays, is expected to spur economic activity.
“With this stimulus and various acceleration of the government programs… we hope that in the second quarter, economic growth can still be maintained at close to five percent,” she remarked at a press conference.
The Indonesian economy has also been significantly impacted by U.S. President Donald Trump’s threatened 32 percent tariffs, which are among the highest in Asia. Indonesian stocks experienced their largest decline in over a decade after the U.S. leader’s “liberation day” announcement in April.
Jakarta is currently engaged in discussions with Washington regarding the tariffs, with a 90-day pause set to conclude in July. Indonesia has committed to increasing its purchases of U.S. products, including wheat, liquefied natural gas, and liquefied petroleum gas, to narrow its trade surplus with Washington.
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