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Today's Headlines Household Consumption

  • Inflation Indonesia: Heightened Money Circulation due to Ramadan & Idul Fitri

    Inflation Indonesia: Heightened Money Circulation due to Ramadan & Idul Fitri

    The holy Islamic fasting month (Ramadan) is set to start in early June. One month later Indonesia will celebrate Idul Fitri (Lebaran), the celebration that marks the end of the Ramadan month. During Idul Fitri millions of Indonesians will travel back to their places of origin to spend some time with their families, a tradition called mudik. Although the Ramadan is a month characterized by self-control, this month and the subsequent Idul Fitri celebrations always cause rising consumption of food products as well as rising consumer spending on clothes, shoes, bags, and other articles.

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  • Indonesia's Higher Non-Taxable Income to Influence Consumption?

    Indonesia's Higher Non-Taxable Income to Influence Consumption?

    Indonesia's plan to  raise people's (annual) non-taxable income by 50 percent to IDR 54 million (approx. USD $4,090) is estimated to add 0.3 percentage point to consumption growth in Indonesia according to Indonesia's Finance Minister Bambang Brodjonegoro. Last week, Brodjonegoro announced this tax incentive with the aim to strengthen Indonesians' purchasing power and encourage household consumption. Household consumption, which accounts for about 56 percent of Indonesia's overall economic growth, has been curtailed in recent years amid slowing economic growth, high inflation and the weak rupiah rate (against the US dollar).

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  • Indonesia to Raise Non-Taxable Income by 50% in 2016

    Indonesia to Raise Non-Taxable Income by 50% in 2016

    The government of Indonesia plans to raise non-taxable income by 50 percent from IDR 36 million (approx. USD $2,727) to IDR 54 million (approx. USD $4,090) in a bid to strengthen people's purchasing power and encourage household consumption. Although at first sight this move should lead to curtailed (income) tax collection, the Indonesian government expects that rising household consumption and investment will lead to higher value-added tax (VAT) and corporate income tax revenue. This should then add 0.16 percentage point to the nation's gross domestic product (GDP) growth.

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  • Economy of Indonesia: GDP Growth Slows to 4.67% y/y in Q2-2015

    Economy of Indonesia: GDP Growth Slows to 4.67% y/y in Q2-2015

    Statistics Indonesia (BPS) announced today (05/08) that the Indonesian economy grew 4.67 percent (y/y) in the second quarter of 2015, the slowest pace since 2009. However, the result was in line with expectation. Most analysts assumed that economic growth would continue to slow as there has been no rebound in global commodity prices, interest rates remained high, people’s purchasing power weakened, government spending remained problematic, companies Q2-2015 earnings reports were not too good, and manufacturing contracted.

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  • Economic Growth of Indonesia Hits Five-Year Low at 5.02% in 2014

    Economic Growth of Indonesia Hits Five-Year Low at 5.02% in 2014

    The economy of Indonesia expanded 5.02 percent year-on-year (y/y) to IDR 8,354 trillion (USD $664 billion) in 2014, the nation’s slowest annual growth pace since 2009, according to the latest data from Statistics Indonesia (BPS). As such, GDP growth failed to achieve the central government’s 5.5 percentage point growth target that was set in the 2014 State Budget. Indonesia’s economic growth has been slowing since 2011 when it still posted a 6.5 percentage point growth rate (y/y). However, growth is expected to rebound from here.

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  • Forecast: Bank Indonesia Expected to Keep Key Interest Rate at 7.5%

    The central bank of Indonesia is expected to keep its key interest rate (BI rate) at 7.50 percent at the next Board of Governors’ meeting (scheduled for Thursday 13 November 2014) in anticipation of accelerated inflation triggered by higher prices of subsidized fuels. The Indonesian government plans to raise prices of subsidized gasoline and diesel before the end of the month in an attempt to curb the country’s wide current account deficit and reallocate government funds to more structural or productive activities than fuel consumption.

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  • Economic Growth of Indonesia Slows to 5.01% y/y in Third Quarter 2014

    Statistics Indonesia announced on Wednesday (05/11) that economic growth in Indonesia reached 5.01 percent year-on-year (y/y) in the third quarter of 2014. This result was slightly below analysts’ forecasts and implies that the slowing trend of economic expansion in Southeast Asia’s largest economy continues. Since 2011, gross domestic product (GDP) growth has been declining amid global and domestic developments. The 5.01 percentage point GDP growth in Q3-2014 was the slowest quarterly growth pace in five years.

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  • Inflation in Indonesia: Easing Inflation Trend Continues in August 2014

    The latest Bank Indonesia survey on the topic of inflation suggests that Indonesia’s inflation pace in August 2014 is still relatively safe. Based on the survey, which monitored inflation in Southeast Asia’s largest economy up to the third week of the month and which usually forms a good indicator for the inflation figure at the month-end, Indonesian inflation in August will be lower than the 0.93 percentage point (month-to-month) of inflation recorded in the previous month. Inflation in Indonesia always shows a peak around in the period June to August.

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  • Bank Indonesia Comments on Slowing Economic Growth in Q2-2014

    Indonesia’s gross domestic product (GDP) growth in the second quarter of 2014 slowed to 5.12 percent (year-on-year, yoy), thus decelerating compared to the nation’s GDP growth in the previous quarter (5.22 percent yoy). The Q2-2014 GDP growth result was lower than the figure that was projected by the central bank of Indonesia (Bank Indonesia). The institution previously stated that it expected Q2-014 economic growth to reach 5.3 percent (yoy). Below are some comment of Bank Indonesia on economic growth in the second quarter.

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  • Relatively Mild Peak in Inflation in Indonesia: 0.93% in July 2014

    On Monday (04/08), Statistics Indonesia (BPS) announced that the July 2014 inflation figure was 0.93 percent (month-on-month), considerably higher than the 0.43 percent of inflation in the previous month but significantly lower than the 3.29 percent inflation recorded in July last year (when inflation accelerated sharply due to higher subsidized fuel prices implemented by the government in June 2013). Head of BPS Suryamin stated that food prices contributed most to the July inflation pace, followed by instant food, drinks, cigarettes and tobacco.

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Latest Columns Household Consumption

  • Indonesian Economy Under Pressure in Q1, Bad Omen for GDP Growth in Remainder of 2020

    Indonesian Economy Under Pressure in Q1, Bad Omen for GDP Growth in Remainder of 2020

    On 5 May 2020 Statistics Indonesia (Badan Pusat Statistik, BPS), a non-departmental government agency, released the first quarter gross domestic product (GDP) data of Indonesia for the year 2020. These data were highly anticipated as policymakers, analysts, and stakeholders are particularly interested in finding out to what extent damage has been done to the Indonesian economy by the self-imposed restrictions.

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  • Gross Domestic Product: Slow Process of Accelerating Economic Growth on Track

    Gross Domestic Product: Slow Process of Accelerating Economic Growth on Track

    In early November 2018 the Central Statistics Bureau (BPS) announced that Indonesia’s gross domestic product (GDP) growth reached 5.17 percent year-on-year (y/y) in the third quarter of 2018. Although it means a slowdown from the 5.27 percent (y/y) growth pace in the preceding quarter, the Q3-2018 GDP growth rate actually slightly exceeded our expectations.

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  • Economy of Indonesia: GDP Growth at 5.27% in Q2-2018 Tops Estimates

    Economy of Indonesia: GDP Growth at 5.27% in Q2-2018 Tops Estimates

    Although overshadowed by the news of the devastating earthquake in Lombok, Statistics Indonesia (BPS) released the official Q2-2018 gross domestic product (GDP) growth figure of Indonesia earlier today. The economy of Indonesia expanded 5.27 percent year-on-year (y/y) in the second quarter of 2018. This growth pace exceeds our expectations although it is not enough to necessitate a revision to our full-year 2018 GDP growth forecast of 5.2 percent (y/y).

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  • Indonesia's Purchasing Power, Retail Sales & Consumption on the Rise

    Indonesia's Purchasing Power, Retail Sales & Consumption on the Rise

    There are signs that household consumption in Indonesia is rebounding ahead of this year's Idul Fitri holiday. This would be a great boost for Indonesia's overall economic growth as private consumption accounts for around 57 percent of the nation's total economic growth. One of the reasons why Indonesia's gross domestic product (GDP) growth has been stuck around the 5 percent (y/y) mark in recent years is subdued household consumption (which has fallen slightly below the 5 percent y/y mark).

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  • Economy of Indonesia: 5.07% GDP Growth in Full-Year 2017

    Economy of Indonesia: 5.07% GDP Growth in Full-Year 2017

    In full-year 2017 the Indonesian economy expanded 5.07 percent year-on-year (y/y). Indonesia's Statistics Agency (BPS) announced on Monday morning (05/02) that the nation's gross domestic product (GDP) growth reached 5.19 percent (y/y) in the fourth quarter of 2017. These figures show a mixed picture.

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  • DBS Group Research: Household Consumption to Improve in 2018

    DBS Group Research: Household Consumption to Improve in 2018

    Household consumption in Indonesia is expected to improve in 2018. This assumption is based on a number of indicators that show a positive trend. For example, consumer confidence in Indonesia rose to 126.4 points in December 2017. The country's macroeconomic picture is also strengthening with accelerating economic growth, low inflation and a stable (or actually appreciating) rupiah rate.

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  • Government of Indonesia Sees No Weakening Purchasing Power

    Government of Indonesia Sees No Weakening Purchasing Power

    Within Indonesia it is still being debated whether consumers' purchasing power has really weakened in the third quarter. Some argue consumers are currently focused on saving their money rather than spending it (this explains rising third-party funds in Indonesia's banking system). Others argue that Indonesia's household consumption data are distorted because this year's Ramadan and Idul Fitri celebrations fell in the second quarter of the year (whereas in 2016 these celebrations fell in Q3).

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  • Bank Indonesia Revises Down 2016 Economic Growth Projection

    Bank Indonesia Revises Down 2016 Economic Growth Projection

    The central bank of Indonesia (Bank Indonesia) revised down its projection for Indonesia's economic growth in 2016 to the range of 5.0 - 5.4 percent (y/y), slightly below its previous forecast in the range of 5.2 - 5.6 percent (y/y). Bank Indonesia Governor Agus Martowardojo said the central bank decided to trim its projection for gross domestic product (GDP) growth this year due to sluggish global economic growth, low commodity prices, and Indonesia's slightly disappointing Q1-2016 GDP growth figure at 4.92 percent (y/y).

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