Soaring prices and dwindling purchasing power have forced many individuals into what they describe as “survival mode.” This isn’t just a challenge for ordinary citizens; recently, the government itself declared it is operating in a similar mode amidst escalating global pressures. But what exactly does this signify for both the people and the state?
Recently, Dwiki Corniju has been forced to cut back on his social outings and his beloved fishing hobby. His drastic measure aims to curb expenditures, ensuring they don’t surpass his shrinking income.
The 36-year-old Solo, Central Java resident, laments a staggering 50% drop in eyewear sales at his shop. This significant downturn has left his financial situation more strained than ever before.
“My earnings are barely enough for daily necessities,” Dwiki told Fajar Sodiq, a journalist reporting for BBC News Indonesia. “So, I have to meticulously manage my expenses, putting aside anything that isn’t absolutely essential.”
In a desperate move, Dwiki even had to pawn his house certificate to secure capital for his business, which currently stands as his sole source of income.
A similar plight has befallen Paijan, a 48-year-old bakso (meatball) and mie ayam (chicken noodle) vendor.
With the costs of plastic and meat climbing, his sales have paradoxically plummeted by 50%. Paijan revealed he now has to cover a deficit of “Rp2 million a week” out of his own pocket.
“Now I avoid any extravagance,” he said with a wry laugh. “Previously, I might buy soto or fried chicken, but now I just eat my own wares.”
Paijan, too, has been forced to incur debt. However, this borrowing isn’t for business capital; it’s merely to pay off other existing installments.
Dwiki and Paijan have been grappling with these hardships for several months, but April marked a critical peak in their struggles.
In Gianyar, Bali, Desak Putu Sri Ratna Juwita is also in “survival mode” as her income has dwindled.
“Everything is more expensive now. And there are fewer tourists, making things quite difficult,” stated Ratna, who juggles two jobs – one at a cafe and another at a spa.
Even with her combined earnings and her husband’s income, it’s still not enough to meet their family’s needs, including their two children. This is further compounded by the burden of their home mortgage payments.
“Besides economizing, I’m constantly looking for extra work, anything I can find. If someone asks me to do something, I’ll do it if I can,” Ratna shared with Ade Mardiyati, a BBC News Indonesia correspondent.
The Government’s “Survival Mode”
Amidst ongoing global economic turmoil, the Indonesian government has repeatedly assured the public that the “Indonesian economy is safe.”
However, on Wednesday (April 22), during a development strategy forum, Minister Purbaya revealed that the government is, in fact, operating in a “survival mode” to safeguard high economic growth and maintain purchasing power.
“I emphasize here, we are in survival mode. Everything must be executed to its utmost potential. There’s no more room for frivolity,” he asserted.
Purbaya stated that this approach aligns with President Prabowo’s directive to achieve an ambitious 8% economic growth target.
To realize this goal, he explained, the government is aggressively establishing various task forces to secure the state budget and enhance the business climate.
The government is also reportedly continuing to push priority programs, including infrastructure development, strengthening energy resilience, and regional economic development.
Reforming natural resource governance, budget efficiency, and boosting industrial capacity are also key areas of focus.
To maintain stability, the government is also accelerating the diversification of energy sources to avoid over-reliance on one or two suppliers amidst global disruption risks.
Despite these tightened strategies, Purbaya expressed confidence that Indonesia’s economic fundamentals remain robust.
He highlighted that approximately 90% of the national economy is still driven by domestic consumption.
Therefore, preserving public purchasing power is considered crucial for sustained economic growth amidst prevailing global pressures.
Experts Weigh In: The Government’s “Survival Mode” Under Scrutiny
Experts agree that when both the public and the government adopt a “survival mode,” it signals that the “economy is not doing well.”
But what exactly does the government’s declared “survival mode” entail, and how does it compare to the struggles faced by ordinary citizens?
According to Titik Anas, an economist from Padjajaran University (Unpad), and Andri Perdana, Research Director at Bright Institute, Minister Purbaya’s “survival mode” statement can be interpreted as an acknowledgment that the current situation is far from ideal.
Titik believes the statement reflects Purbaya’s understanding of international volatility that could impact the State Revenue and Expenditure Budget (APBN), which he is tasked with safeguarding.
“Every time oil prices rise above the APBN’s assumptions, there’s a greater burden on the state because we provide subsidies and compensation, be it for fuel, fertilizers, LPG, or electricity,” Titik explained to BBC News Indonesia on Friday (April 24).
Compounding this challenge is the continued weakening of the rupiah.
By the close of trading on Friday (April 24), the rupiah’s exchange rate stood at Rp 17,246 per US$1, significantly weaker than the APBN’s assumption of Rp 16,500 per US$1.
This rupiah depreciation directly impacts several components within the national budget.
Consequently, Titik views Purbaya’s statement as a “good start,” suggesting the minister is willing to make adjustments and maintain a prudent APBN, partly by implementing efficiencies and addressing leaks.
“Perhaps he is beginning to realize that fiscal policy needs greater discipline in facing current economic challenges,” she remarked.
While Titik praised Purbaya’s statement as a positive realization, Andri Perdana interpreted the finance minister’s words as actually exposing the true underlying conditions.
“It implies that normally we are not cautious or prudent. Or it means that our normal mode is one where people are free to relax,” Andri commented critically.
The economist argued that Purbaya’s statement is merely “normative,” lacking concrete follow-up actions like budget restructuring or reorganization to salvage the fiscal space, which many experts claim is rapidly shrinking.
Rather than indicating a cautious government committed to preserving economic stability and purchasing power amidst global economic shocks, Andri believes the “survival mode” label instead reveals that the nation’s economic resilience and fundamentals are “not as beautiful as the narrative suggests.”
“The country is entering survival mode as if it were the most impacted by this Gulf War, when in fact, we should be one of the most resilient nations,” he stated.
“If we enter survival mode just from indirect impacts, we will be in survival mode forever, because global shocks will always be present.”
Media Wahyudi Askar, Public Policy Director at the Center of Economic and Law Studies (CELIOS), emphasized that true “survival mode” implies “frugality and minimal risk.”
What the government is currently doing, he contended, is quite the opposite. He went further, calling the government’s declared survival mode “unreasonable.”
“Currently, the Kopdes (Village Cooperative) Merah Putih is injecting large sums of money, which carries high risks. If implementation fails, it will also hit the village economy hard,” he explained.
The Kopdes Merah Putih recently initiated its first recruitment phase for 30,000 managerial positions across Indonesia.
Several national media outlets have reported that the number of applicants reached hundreds of thousands.
While public enthusiasm is high, Purbaya had previously admitted he was unsure about the funding sources for the future salaries of these Kopdes Merah Putih managers.
What Should the Government Do in “Survival Mode”?
While Titik believes the government should have adopted “survival mode” “a long time ago,” implementing it now is “not too late.”
Titik emphasized that the government must be disciplined with its spending.
“Untested programs should be scaled down first so that spending is not excessive and becomes sensible, reducing fiscal risk. Even if the SAL [budget surplus] is quite substantial, its use must be calculated meticulously,” Titik advised.
She considers the government’s decision to make the Free Nutritious Meal Program (MBG) more targeted to be a sound move.
However, Titik added that for programs not yet underway, their impact should first be thoroughly analyzed, and pilot projects should be implemented.
“The difference between the government and the public is that the government must continue to spend when the economy weakens. Its spending must be more careful, focusing on what truly has an impact, including safety nets for communities whose purchasing power has eroded,” Titik clarified.
Concurring, Andri argued that in a national “survival mode” context, the government should reduce its budget deficit by eliminating several programs, rather than accumulating more debt.
“Literally, the MBG should be directly cut or even stopped. That’s what true survival mode entails. Wouldn’t this country survive without the MBG?” Andri asserted.
“And the village cooperatives – if Indonesia didn’t have that program, Indonesia wouldn’t collapse, would it? So, the Minister’s statement is once again just meaningless rhetoric.”
Current State of Indonesia’s Economy
The government has set an ambitious long-term target for consistent economic growth in the range of 7-8%.
However, several parties project that actual achievements are likely to fall short of this goal.
The Institute for Development of Economics and Finance (INDEF) projects Indonesia’s economic growth for 2026 at 5%, influenced by increasing global uncertainty and domestic conditions.
Earlier in April, the World Bank projected Indonesia’s economic growth to slow to 4.7%, citing headwinds from rising oil prices and risk-aversion sentiment.
Meanwhile, on Wednesday (April 22), Bank Indonesia estimated this year’s economic growth to be in the range of 4.9%-5.7%.
Conversely, the government predicts robust economic growth of 5.5% for the first quarter of 2026, spurred by stable household consumption, Eid holiday bonuses (THR payments), and accelerated government spending.
The rupiah’s exchange rate against the US dollar and other major currencies continues its weakening trend, reaching Rp 17,300 per US dollar on Thursday (April 23).
Anthony Budiawan, Managing Director of PEPS (Political Economy and Policy Studies), pointed out that the rupiah has, in fact, been depreciating for over a decade.
Meanwhile, on the fiscal front, many economists warn that the APBN’s fiscal space is rapidly narrowing.
This situation is described as “concerning” and “vulnerable,” burdened by excessive budget spending and the pressure of government debt interest.
Journalists Fajar Sodiq in Solo and Ade Mardiyati in Denpasar contributed to this report.
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Summary
Soaring prices and dwindling purchasing power have forced many individuals, like Dwiki, Paijan, and Ratna, into “survival mode,” leading them to drastically cut expenses and incur debt. This mirrors the Indonesian government’s recent declaration of operating in a similar mode due to escalating global economic pressures. Despite assurances of a robust economy, this synchronized “survival mode” from both citizens and the state signals an economy that experts agree is “not doing well.”
The government’s “survival mode” involves implementing strategies such as establishing task forces, pushing priority programs, and enhancing budget efficiency, with the goal of safeguarding economic growth and public purchasing power. However, experts offer mixed views; some see it as a positive step towards fiscal discipline in the face of international volatility and a weakening rupiah, while others criticize it as mere rhetoric, arguing that the government’s actions, including high-risk spending, contradict true frugality. They recommend disciplined spending, scaling down untested programs, and eliminating non-essential initiatives to effectively manage the narrowing fiscal space.