Prabowo Subianto Marks Two Years of State-Funded Growth

President Prabowo Subianto marks two years in office with an economy characterized by state-funded growth and increasing fiscal risk. Statistics Indonesia reported growth rates of 5.61 percent in the first quarter and 5.29 percent in the second quarter, though critics argue this expansion is not market-driven.

Analysis indicates the growth is fueled by a 16 percent rise in government consumption and a 24.7 percent surge in state bank investment credit. Concerns have emerged regarding the administration's flagship welfare initiatives, including the free nutritious meals program and the Red and White Cooperatives program. The latter creates a potential contingent exposure of up to Rp 420 trillion over six years.

Despite these headline growth numbers, the domestic labor market has struggled. Formal employment has contracted for six consecutive quarters, and the middle class has shrunk by approximately 10 million people since 2019.