$1.5 Billion Stimulus Unveiled as Indonesia Faces Slower Growth
Indonesia began rolling out a $1.5 billion stimulus package Thursday to boost consumer activity after Southeast Asia's biggest economy posted its slowest growth in more than three years in the first quarter. The archipelago nation's economy grew 4.87 percent from a year earlier in the first three months of 2025 -- a sluggish rate for the developing country last seen during the Covid-19 pandemic in mid-2021. President Prabowo Subianto has drawn criticism for his economic policies, including slashing $19 billion from the government budget to fund a new sovereign wealth fund. The new stimulus measures include discounts for train, plane and ferry tickets as well as toll subsidies to boost tourism.
The government will also disburse additional social aid, while giving cash transfers to low-income workers and discounts on unemployment insurance premiums. A finance ministry spokesperson told AFP the programme would come into force on Thursday, after the measures were announced earlier in the week. Finance minister Sri Mulyani Indrawati said Monday the package would spur economic activity, with the incentives in force during the school holidays. "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 told a press conference. The Indonesian economy has been roiled by US President Donald Trump's threatened 32 percent tariffs, among Asia's highest.
Indonesian stocks saw their biggest fall for more than a decade after the US leader's "liberation day" announcement in April. Jakarta remains in talks with Washington over the tariffs before a 90-day pause concludes in July. It has promised to buy more US products to narrow its trade surplus with Washington, including wheat, liquefied natural gas and liquefied petroleum gas.
