Chandra Adi Nurwidya, Arnoldus Kristianus, Jakarta – Consumer spending ahead of Eid al-Fitr 2025 has declined compared to the previous year, with a predicted slowdown in cash circulation due to fewer travelers.
The Transportation Ministry estimates that this year's Eid travelers will reach 146.48 million people, a 24 percent drop from last year's 193.6 million travelers.
Meanwhile, the Indonesian Chamber of Commerce and Industry (Kadin) projects that money circulation during Eid will reach Rp 137.97 trillion ($8.33 billion), down from Rp 157.3 trillion last year.
Yudistira Hendra Permana, an economist at Gadjah Mada University's Vocational School, attributes the decline in spending to weakened purchasing power, driven by prolonged deflation, currency depreciation, soaring gold prices, and a sluggish stock market.
"These trends indicate that the economy is under strain," Yudistira told Beritasatu.com on Thursday.
Indonesia has seen persistent deflation, with monthly rates of -0.76 percent in January and -0.48 percent in February. February's annual deflation of -0.09 percent marked the first in 25 years, since March 2000.
The weakening purchasing power is also reflected in Bank Indonesia's Consumer Confidence Index (CCI), which dipped to 126.4 in February from 127.2 in January.
Household consumption, traditionally a key driver of Indonesia's GDP, contributed over 50 percent to the economy last year, helping push annual growth to 5.11 percent. However, consumer spending in 2025 is expected to be more subdued.
Yudistira warned that declining demand could significantly affect micro, small, and medium enterprises (MSMEs), which employ a large portion of Indonesia's workforce. "If small businesses take a hit, the ripple effect will be widespread," he said.
He advised Indonesians to manage finances wisely but cautioned against extreme saving measures that could further slow economic activity. "Be prepared for challenges ahead. Save where necessary, but don't tighten the belt too much," he added.
Bhima Yudhistira, Executive Director of the Center for Economic and Law Studies (Celios), expects a less vibrant festive season. "Mass layoffs in manufacturing have weakened both corporate earnings and workers' incomes, suppressing consumer spending," he told B-Universe Media Holdings.
A YouGov survey published on Feb. 15 found that 58 percent of 2,012 respondents aged 18 and above planned to save their holiday bonuses instead of spending them.
Government implements economic stimulus
Despite the downturn, the government remains optimistic that the Ramadan and Eid momentum will support economic growth in the first quarter of 2025.
"Eid usually boosts the economy through increased spending. The government hopes this will drive Q1 growth," Chief Economic Affairs Minister Airlangga Hartarto said on Thursday.
To stimulate economic activity, the government has introduced various incentives, such as airfare and toll road fee discounts, nationwide online shopping events, direct cash assistance for 16 million households, electricity bill reductions for low-consumption customers, and tax exemptions for labor-intensive sectors.
Airlangga said that last year's higher spending was partly due to the 2024 election cycle, which will not be a factor this year.
"With these programs in place, the government aims to sustain consumer spending and support economic stability," he concluded.
Source: https://jakartaglobe.id/business/eid-travel-and-spending-decline-in-2025-government-pushes-stimulu