JAKARTA - Senior Economist Chatib Basri assessed that the economic conditions in the country were not as bad as imagined because of the strong foundation of domestic consumption and government spending.
The former Minister of Finance for the 2013-2014 period admitted that the conflict in the Middle East which had an impact on the rise in crude oil prices indeed threatened the 2026 state budget deficit.
Based on his calculations, every increase of 1 US dollar in crude oil prices, the state budget deficit widens by Rp6.8 trillion.
However, according to him, the war between the US-Israel against Iran will not last long.
Because, US President Donald Trump has a political interest in securing the inflation rate ahead of the mid-term elections in late 2026.
On the other hand, Chatib assessed that the Indonesian economy is still in good condition, reflected by high household and government consumption in the first quarter of 2026.
"The situation at home is not as bad as imagined. Maybe many parents and parents disagree with me. Why (not as bad as imagined?) Because if you look at it, in the first quarter, household consumption is still relatively good, driven by Lebaran at that time and also the one who has an influence is government consumption," said Chatib in the Grab Business Forum 2026 entitled 'The Next Chapter: Scale Smarter, Execute Faster' in Jakarta, Tuesday, June 9.
Meanwhile, the growth of consumption or government spending is quite high, reaching around 22 percent in the first quarter of 2026. Based on these figures, Chatib assessed that the government would not spend that much again in the second quarter to the fourth quarter of 2026.
If government spending growth is high again, he said, the government needs to find revenue increases such as increasing tax revenue. However, he believes, this step will not be taken in the near future.
"So it's possible that in the second, third and fourth quarters, the growth of government spending is unlikely to be 22 percent. Then we will start experiencing a deceleration in economic growth," he said.
According to Chatib Basri, the decline in investor confidence in the Indonesian economy is due to concerns about the widening of the state budget deficit exceeding 3 percent.
He assessed that this would not happen if government spending could be controlled in the following quarters.
The reason is that Chatib Basri assessed that the tax collection rate would decrease in the third and fourth quarters.
"The question is whether government spending will continue to be this high in the future?... While tax revenue has grown by around 18 percent, while spending (government) is 34 percent. There is a possibility that tax revenue (government) will also slow down. If not, the budget deficit will be more than 3 percent," said Chatib.
"This is what then causes anxiety from people, from investors. They are worried that this deficit will be sustainable or not," he added.
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