When contacted by ANTARA in Jakarta on Friday, he mentioned that social assistance spending, government projects, and priority programs were the primary factors supporting domestic demand in the first quarter of 2026.
Statistics Indonesia (BPS) reported that government spending grew 21.81 percent in the first quarter of 2026. This contributed 1.26 percent to the gross domestic product (GDP) in the first quarter, which recorded an overall growth of 5.61 percent.
“Government spending in the first quarter became a vital pillar of economic growth amid weak middle-class consumption and a slowdown in manufacturing,” he remarked.
However, he pointed out that the effectiveness of government spending remains less than optimal, given that a significant portion is still driven by routine expenditures.
Meanwhile, the manufacturing Purchasing Managers Index (PMI) has dipped close to the stagnation zone, and consumer purchasing power still requires support.
“This implies that fiscal policy currently serves more as a cushion against the economic slowdown rather than a driver for new expansion,” Taufikurahman said.
He expressed the belief that for the coming quarter, government spending will continue to support growth, though the room for acceleration may be limited if the private sector does not experience a strong recovery.
The strategy of front-loading the state budget is considered to have helped maintain first-quarter growth above 5 percent, but its sustainability will depend heavily on the quality of spending.
“If spending only drives short-term consumption without strengthening investment, industry, and job creation, then the multiplier effect will quickly diminish,” he said.
In this regard, he recommended that the government broaden its focus from merely accelerating budget absorption to ensuring productive spending.
Government spending needs to be directed toward programs that have a high multiplier effect and can attract domestic investment.
This strategy is deemed vital to prevent growth from moderating in the second half of the year.
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Translator: Imamatul Silfia, Raka Adji
Editor: Azis Kurmala
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