- Subnational spending contracts by more than transfers do: across 38 provinces, consolidated expenditure falls by 7.2 percent in 2025, compared with a 4.9 percent decline in TKD receipts, while 84 percent of provinces record lower spending than in the preceding year.
- The absence of a clear cross-provincial GRDP relationship should not be interpreted as evidence of no economic effect: after excluding two extreme GRDP observations, the 2025 cross-section has limited statistical power, with an approximate minimum detectable local fiscal multiplier of 1.26.
- Sectoral weakness is uneven rather than uniform: construction records negative real growth in 26.3 percent of provinces and financial activity excluding 15.8 percent, while insurance and pension-fund activity remain positive across all 38 provinces. Insurance resilience therefore reflects the breadth of positive growth rather than exceptional growth performance.
Toward Stronger Financial Industry in Indonesia