March 25, 2026 | 04:09 pm
TEMPO.CO, Jakarta - Yusuf Rendy Manilet, an economist at the Center of Reform on Economics (CORE), urges the Indonesian government to mitigate economic challenges following the Ramadan and Eid al-Fitr season.
According to Yusuf, first-quarter 2026 performance will be driven quite strongly by economic activity during Ramadan and Eid al-Fitr. But economic performance will normalize once this period ends, and at the same time, the economy as a whole is facing complex challenges.
“The challenges are growing more complex now, because we’re not just talking about seasonal effects fading, but also external and domestic pressures that could hold back consumption going forward,” Yusuf told Antara in Jakarta on Wednesday, March 25, 2026.
For the first quarter, household consumption—boosted by a surge in spending during the Ramadan and Eid al-Fitr season—serves as a solid foundation for short-term economic growth.
However, given that this surge in spending is seasonal rather than a permanent growth in purchasing power, this boost will gradually level off.
The waning seasonal effects are exacerbated by external and domestic pressures, including the rising energy prices.
“When fuel, power, or global energy prices surge, the impact is immediate on living and production costs, thereby narrowing household spending capacity while simultaneously causing businesses to be more cautious about expansion,” explained Yusuf.
He also highlighted the risk of extreme weather, which could disrupt domestic food production and drive up prices of strategic commodities, such as rice and other staples.
Yusuf emphasized that this risk is particularly critical because food inflation has a direct impact on people’s purchasing power, especially for the lower-middle class.
“Hence, we are looking at a potential decline in real consumption if these price pressures remain unchecked,” he added.
From a distribution perspective, Yusuf continued, the impact also tends to become increasingly uneven, as low-income groups will be most affected by rising energy and food prices, while the upper class is relatively more resilient.
Meaning, aggregate consumption will continue to grow but with relatively weaker quality and a narrower base. Therefore, Yusuf argued that while Eid al-Fitr successfully bolstered first-quarter economic growth, that momentum now faces a significant test.
“Without strong purchasing power and price stability—for both energy and food—domestic consumption will struggle to serve as a sustainable engine of growth, and ultimately this will also limit the overall pace of economic growth in the coming period,” he said.
Read: Celios Forecasts 5.05% Growth Fueled by Ramadan-Eid Spending
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