The increase in election budgets raises hopes for economic impact in the country. Dr. Rijadh Djatu Winardi from the UGM Faculty of Economics and Business (FEB UGM) stated that the budget used in elections is quite substantial. However, the effects of campaign and election funds on Gross Domestic Product (GDP) are still limited.
“The impact ranges from 0.1 to 0.2 percent of GDP,” he said at a recent Pojok Bulakumur event at the UGM Central Building.
This Accounting Department lecturer explained that the public does not widely feel the impact of election funds. This is because the public still faces inflation or price increases for goods and services.
“Some also argue that the current effect will not be as significant as previous elections,” he said.
This situation arises because several presidential candidate pairs did not outsource their funds but used their companies to produce banners, shirts, and other campaign attributes.
He also highlighted a recurring pattern in Indonesian elections. In each election, household consumption always increases, and investment decreases. Although there is an increase, it is mostly in Non-Profit Household Institutions (LNPRT).
Consumption for producing campaign attributes such as banners and billboards remains a key factor in boosting economic growth.
“Economic growth during elections is still limited, with the impact focused mainly on LNPRT,” he mentioned.
Meanwhile, there is a delay on the investment side. Dr. Winardi mentioned that investment figures in the country do not increase during each election.
“Businesses always try to wait and see. They hope the elections will end soon for more certainty and to proceed with investments,” Dr. Winardi clarified.
Author: FEB UGM
Editor: Ika
Image: rayapos