Jakarta. Indonesia’s economy is forecast to expand 5.5% in the first quarter of 2026 thanks to the massive government spending, according to think-tank Core Indonesia.

Just a few days ago, Finance Minister Purbaya Yudhi Sadewa announced that the government spending would reach up to Rp 809 trillion ($48 billion) in the first quarter. A portion of the money will go into stimulus packages, including airfare discounts meant to spur spending during the holiday season. The government is planning to roll out the Eid bonus for civil servants much earlier, namely in the early days of Ramadan. Core Indonesia senior economist Mohammad Faisal said Tuesday that all these combined can provide an impetus for growth.

“I believe the [Q1 growth] can reach 5.5%,” Faisal said.

However, Core Indonesia expects modest contributions from investment and net exports over the first quarter. Investment will see a modest growth, while trade surplus is expected to shrink from the previous quarter. This puts household consumption and state spending as the key driving forces.

“A 5.5% growth is still possible, but 6% is still a long way to go,” Faisal said.

Finance Ministry data showed that the government had allocated Rp 13 trillion in stimulus packages for this quarter alone. It has budgeted around Rp 55 trillion to pay the Eid bonuses of civil servants, military personnel, and policemen. The state money designated for the free meal rollout stands at Rp 62 trillion in this quarter alone. A Rp 6 trillion budget is earmarked for the flood-hit Sumatra reconstruction.

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