Homecoming as an Economic Engine: The Power of Indonesia’s Mudik
Mohammad Nur Rianto Al Arif
(Professor at UIN Syarif Hidayatullah; Assistant to the Presidential Special Envoy for Food Security; Secretary General of the Indonesian Lecturers Association; Member of IAEI and ISEI Jakarta)
Every year, ahead of Eid al-Fitr, Indonesia experiences a unique and massive social phenomenon known as mudik. This tradition of returning to one’s hometown is not merely an emotional journey to reunite with family but also one of the largest economic events in Indonesia.
Within just a few weeks, human mobility increases drastically, public consumption surges, and economic activity intensifies from major cities to rural villages across the country.
Mudik, therefore, should not only be understood as a cultural tradition but also as an economic phenomenon. It generates massive money circulation, stimulates trade, and drives sectors such as transportation, tourism, and micro, small, and medium enterprises (MSMEs). In this sense, mudik can be seen as one of the most significant grassroots economic moments in Indonesia.
This article aims to examine mudik from an economic perspective: how money circulates, which sectors benefit, its impact on regions, and its implications for the national economy.
Mudik is a deeply rooted tradition in Indonesian society. Sociologically, it represents the emotional connection between urban communities and their hometowns. Decades of urbanization have led millions of people to work in major cities such as Jakarta, Surabaya, or Bandung, while their social roots remain in rural areas.
Thus, Eid becomes an important moment to return home, reconnect, and share happiness with family. However, when millions of people move simultaneously, the impact is not only social but also economic.
Each traveler brings money, purchases transportation tickets, buys gifts, consumes food along the way, and spends money in their hometown. This chain of activities creates a broad economic effect.
Data shows that the scale of mudik in Indonesia is enormous. During the 2025 Eid season, the number of travelers was estimated at 146.48 million people, or around 52% of Indonesia’s population.
Although this figure is lower than in 2024, which reached 193.6 million travelers, it still reflects the massive scale of mobility during Eid. This makes mudik one of the largest periodic human migrations in the world.
For 2026, the Ministry of Transportation projects a slight decline. Numerically, the number of travelers is expected to decrease by about 1.7% to 143.9 million people.
From an economic standpoint, mudik represents a massive circulation of money. During the 2024 Eid season, total spending during Ramadan and Eid was estimated at IDR 157.3 trillion. In 2025, it ranged between IDR 137 trillion and IDR 145 trillion. For 2026, the projected circulation is expected to reach IDR 190 trillion.
These figures show that Mudik is not just a homecoming journey but also a mechanism of economic redistribution from cities to regions. Economic activity in Indonesia is largely concentrated in major cities, especially on Java.
Mudik becomes the moment when money “flows back” to the regions. It is estimated that around 60% of this circulation occurs on Java, as most travelers originate from and return to this island. From a regional economic perspective, this can be seen as seasonal redistribution.
One of the main drivers of mudik’s economic impact is the payment of the holiday allowance (THR). Before Eid, companies are required to provide this bonus, which becomes the main source of public spending during Ramadan and Eid.
THR is used for travel costs, Eid shopping, buying new clothes, giving money to family members, and for charity or Zakat. This surge in consumption creates a strong economic cycle. Retail trade sees increased sales, traditional markets become crowded, shopping centers fill up, and digital transactions rise sharply.
In macroeconomic theory, this can be explained as a consumption shock—a temporary surge in spending that boosts short-term economic growth. This is why many economists consider Ramadan and Eid key drivers of quarterly economic growth in Indonesia.
Mudik creates a multiplier effect across various sectors. The transportation sector is the most visibly impacted, with increased demand for flights, trains, buses, ships, and travel services.
Land transportation such as private cars and buses remains the primary choice, while trains and airplanes also see significant increases in passengers. This mobility boost raises revenues for transportation companies and stimulates supporting sectors like fuel, logistics, and parking services.
The second sector is tourism. Mudik is often combined with family vacations. Many travelers visit tourist destinations in their hometowns, leading to increased visits to beaches, parks, and natural attractions. Hotels, restaurants, and culinary businesses benefit as well.
One of the most positive impacts of Mudik is the revival of local economies. When travelers return home, they bring money that is spent in local markets. Food vendors, clothing sellers, souvenir businesses, and street vendors all benefit from increased consumption. For many villages, Eid is a time when the local economy comes alive.
Retail is another major sector impacted. Shopping centers, clothing stores, supermarkets, and traditional markets experience higher sales during Ramadan and Eid. Common purchases include new clothes, food and beverages, Eid cookies, hampers, and souvenirs.
One of the most interesting aspects of mudik is its role in economic redistribution. For most of the year, money circulates in large cities. During mudik, it temporarily shifts to rural areas.
Travelers bring money from cities and spend it in their hometowns, giving villages a significant liquidity boost. This increases purchasing power, strengthens local MSMEs, and boosts market activity. From a development perspective, this can be seen as an informal economic transfer from cities to villages.
Despite its economic benefits, mudik also faces challenges. The first is declining purchasing power. In recent years, economists have noted a decrease in both the number of travelers and Eid spending.
The drop from 193.6 million travelers in 2024 to 146.48 million in 2025 reflects changes in economic behavior, with some choosing not to travel to save money.
Another issue is rising transportation costs. Ticket prices for planes and trains typically increase due to high demand, limiting people’s ability to travel.
The third challenge is inequality. While mudik brings money to villages, the effect is temporary. After Eid, economic activity returns to cities, making this redistribution seasonal.
From a macroeconomic perspective, mudik has several implications. It increases household consumption, the largest component of Indonesia’s GDP. It also boosts regional economic activity and creates multiplier effects across sectors.
As a result, Ramadan and Eid are often seen as periods that help sustain national economic growth. Even with fewer travelers, economic activity during Eid still contributes to quarterly growth.
Given its potential, an important question arises: how can the economic impact of mudik be maximized?
Several strategies can be implemented. First, strengthening rural MSMEs so that spending by travelers is absorbed locally. Second, developing regional tourism to turn hometowns into family travel destinations during Eid.
Third, promoting digital transactions to improve efficiency and expand financial inclusion. Fourth, investing in transportation infrastructure to support mobility and strengthen regional connectivity.
Mudik is a uniquely Indonesian tradition. It reflects not only cultural and spiritual values, but also the dynamics of the people’s economy.
Every year, millions return home, bringing hope, happiness, and significant economic activity. The value generated reaches hundreds of trillions of rupiah and drives multiple sectors.
In this context, mudik represents one of the most tangible forms of grassroots economic activity. It shows that economic movement is not only driven by large-scale policies or investments but also by living social traditions.
Understanding mudik means understanding the pulse of Indonesia’s economy—dynamic, collective, and full of social energy. If managed well, mudik can become not only a tradition but also a driver of regional economic growth and more equitable prosperity.
This article was published in CNBC Indonesia on Thursday, March 12, 2026.