Middle-Lower Class Purchasing Power Key to Indonesia's Second-Half Economic Growth

The purchasing power of Indonesia's lower and middle-income population is the linchpin for maintaining national economic growth in the latter half of 2026, according to an economist. The government must prioritize supporting this demographic through the third and fourth quarters.

Household consumption, the primary engine of the Indonesian economy, showed signs of slowing in the second quarter of 2026. It grew by 5.06% year-on-year, a decrease from the 5.52% growth recorded in the first quarter. This slowdown warrants attention, as household consumption still underpins the national economy, contributing 2.67% to the overall economic growth of 5.29% in the second quarter.

If consumption weakens while the national economy continues to hover around 5% growth, it indicates an increasing reliance on other components like investment and government spending. Therefore, concerted efforts are needed to reinvigorate household consumption for the remainder of the year. Key measures include controlling food inflation, ensuring aid reaches the intended recipients, providing transportation incentives, and implementing policies that lower the overall cost of living.

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In the third and fourth quarters, the government needs to focus on maintaining purchasing power, especially for the lower-middle group.