Jakarta’s bustling Tanah Abang Market, a hub for holiday shopping, was alive with activity in early March as Indonesians prepared for Eid al-Fitr, the celebration marking the end of Ramadan. The tradition of buying new clothes and goods for the occasion typically fuels a significant economic surge across the country. Yet, this year, despite the festive spirit, the anticipated financial boon has fallen short, raising concerns among business leaders and policymakers about broader economic challenges facing the world’s largest Muslim-majority nation.
A Muted Economic Impact
The Eid al-Fitr holiday, also known as Idul Fitri in Indonesia, is traditionally a time of heightened consumer spending, as millions participate in the annual mudik exodus—a mass homecoming to celebrate with family. This migration often drives demand in sectors like transportation, hospitality, and retail. However, 2025 has painted a different picture. Shinta Kamdani, chairwoman of the Indonesian Employers’ Association (Apindo), noted a disappointing trend, stating, “There may be an increase, but it won’t be as significant as usual. [The boost] will be lower than last year” as reported by bisnis.com on April 1, 2025.
Her assessment is backed by data from the Transportation Ministry, which projects a sharp 24 percent decline in mudik travelers, dropping from 193.6 million in 2024 to just 146.5 million this year. This reduction signals a potential ripple effect on regional economies that rely heavily on holiday traffic to stimulate local businesses, from roadside eateries to small-scale vendors. 
Declining Money Circulation and Household Pressures
The Indonesian Chamber of Commerce and Industry (Kadin) has also sounded the alarm on the economic outlook for this festive season. Sarman Simanjorang, Kadin’s deputy chair for regional autonomy, forecasted a 12.3 percent drop in money circulation compared to last year. “Last year, we estimated that Idul Fitri would drive Rp 157.3 trillion (US$9.3 billion) in money circulation. This year, we expect only Rp 138 trillion (US$8.2 billion)” he told Kompas on March 18, 2025. The figures, adjusted to reflect exchange rates as of the upload date, underscore a significant contraction in holiday-related economic activity.
Several factors contribute to this downturn. Simanjorang highlighted the unusually short gap between the New Year and Idul Fitri holidays—just three months apart in 2025—which may have strained household budgets. Additionally, many families are conserving funds for upcoming expenses, such as the start of the new school year in June, while others face financial insecurity due to job losses or reduced income. These pressures have dampened the festive spending that typically characterizes the season.
Government Efforts and Sectoral Variations
Despite the gloomy projections, not all sectors are equally affected. Transportation, hospitality, and food and beverage industries have seen some uplift, albeit at subdued levels compared to previous years. Shinta Kamdani praised government initiatives aimed at stimulating demand, such as airfare discounts and other incentives. “Even though it’s not as strong as in previous years, we are still making efforts to boost economic growth through promotions and sales” she added, reflecting a cautious optimism about mitigating the downturn.
However, not everyone shares this tempered outlook. Coordinating Economic Minister Airlangga Hartarto downplayed concerns about reduced money circulation, suggesting that comparisons to 2024 are skewed by unique circumstances. “It’s moderate. Last year, we were having the presidential and legislative elections, so it’s different” he remarked on March 26, 2025. His comments point to the extraordinary economic activity spurred by election-related spending in the prior year, which may have inflated benchmarks for holiday performance.
Broader Economic Context and Challenges
The muted economic impact of Eid al-Fitr this year comes against a backdrop of broader challenges for Indonesia’s economy, Southeast Asia’s largest. While the country has shown resilience in recovering from global disruptions, including supply chain issues and inflationary pressures post-pandemic, structural issues persist. Unemployment rates, though improved, still affect significant portions of the workforce, particularly in informal sectors that rely on seasonal boosts like Idul Fitri for income stability.
Moreover, the decline in mudik travel reflects not just financial constraints but also shifting social patterns. Urbanization and changing family dynamics may be reducing the number of people returning to rural hometowns, a trend that could have long-term implications for regional economies. Small businesses in provinces outside major cities like Jakarta and Surabaya often depend on the influx of returning families to drive sales of local goods and services. A sustained drop in such activity could exacerbate urban-rural economic disparities, a concern already on the radar of policymakers.
Regional and Global Comparisons
Indonesia’s experience with a lackluster Idul Fitri economy is not unique. Across the Muslim world, where Eid celebrations often coincide with significant consumer spending, economic conditions are influencing holiday behavior. In neighboring Malaysia, for instance, reports suggest a similar moderation in festive expenditure, driven by cost-of-living pressures despite government subsidies for fuel and essential goods. Globally, inflationary trends and geopolitical uncertainties continue to weigh on consumer confidence, affecting discretionary spending even during culturally significant periods.
Yet, Indonesia’s case stands out due to the sheer scale of its mudik phenomenon, often described as one of the largest annual human migrations in the world. The projected drop of nearly 47 million travelers this year is a stark indicator of how deeply economic challenges are felt at a grassroots level. Analysts suggest that if this trend persists, it could signal a need for more targeted stimulus measures, beyond temporary discounts, to address underlying issues of purchasing power and employment.
Looking Ahead: A Call for Sustainable Solutions
As Indonesia navigates this disappointing holiday season, questions linger about the government’s capacity to reignite economic momentum. While short-term incentives like airfare reductions are a step in the right direction, they may not suffice to address systemic challenges facing households. Economists argue for broader policies, such as enhanced social safety nets and vocational training programs, to bolster financial security for vulnerable populations most affected by seasonal downturns.
Public sentiment, as gleaned from social media platforms like X, reflects a mix of resignation and hope. Many Indonesians express frustration over rising costs and shrinking budgets, yet there remains a cultural resilience tied to the spirit of Eid—a time of community and renewal. Whether this resilience can translate into economic recovery depends on coordinated efforts between the government, private sector, and civil society to tackle the root causes of declining consumer confidence.
For now, the scenes at Tanah Abang Market serve as a poignant reminder of the gap between tradition and economic reality. As shoppers haggle over prices and prepare for family gatherings, the nation watches to see if the festive spirit can inspire a much-needed turnaround in the months ahead.
