Overview

• In his first State of the Nation address, Prabowo highlighted Q2 GDP growth of 5.12% and unemployment at its lowest since the Asian financial crisis as evidence of his welfare-driven strategy’s success.
• He unveiled a 2026 budget projecting a 2.48% of GDP deficit and earmarked 335 trillion rupiah to expand free meals to 82.9 million students, children and pregnant women.
• Prabowo vowed to tackle “serakahnomics” by deploying the military and sovereign wealth fund Danantara against monopolies, illegal mines and unauthorized palm oil plantations.
• Government officials say they have saved about 300 trillion rupiah by slashing waste-prone expenditures and pledged to pursue major corruption cases with support from the KPK and other institutions.
• Economists and the Finance Ministry caution that the administration’s ambitious social and green spending plans could strain public finances and test long-term fiscal sustainability.