"At least in the first 100 days, I think the quick win for the new government is purchasing power," the deputy director of Indef, Eko Listiyanto, said during a discussion here on Tuesday.
According to him, improvement in the community's purchasing power is key to pushing economic growth in the initial period of government transition.
With improved purchasing power, he said, it is possible that expectations for economic growth will change for the better.
Listiyanto noted that the contribution of household consumption to economic growth remained dominant in the first quarter of this year.
However, he noted, economic performance during that period was saved by the accelerated consumption of government spending, which was around two times higher compared to normal due to the implementation of the general elections in February 2024.
"Household consumption (growth) did not even reach 5 percent (in the first quarter of 2024)," he said.
Even though the Consumer Confidence Index (CCI) for May 2024 is at an optimistic level, the index fell from 127.7 in April to 125.2 in May, he pointed out.
However, according to Indef, there will be opportunities for the consumption sector until the end of the year. Listiyanto estimated that consumption would increase in line with the Christmas and year-end holidays as well as the momentum of the regional elections.
The new government will also face several challenges, including the risk of increasing excise duty and the planned 12 percent value-added tax (VAT) in 2025, education inflation, risks in fuel and liquefied petroleum gas (LPG) prices, and the increase in prices of basic commodities.
He also underscored that it is not easy to realize an average economic growth of 7 percent. If the new government's policies are not very different from those implemented currently, economic growth will only be at the level of 5 percent, he projected.
"For 2024, Indef does not project it (economic growth) to be at 5 percent; ours is lower, only 4.8 percent, and we have not revised it because even in the first quarter (of 2024), it was only 5.11 percent," he explained.
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Translator: Rizka Khaerunnisa, Raka Adji
Editor: Azis Kurmala
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