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Today's Headlines Household Consumption

  • Indonesia's Purchasing Power Weaker? See Cash Outflow & Inflation

    Indonesia's Purchasing Power Weaker? See Cash Outflow & Inflation

    Whereas Indonesia's inflation pace usually accelerates markedly ahead of the Idul Fitri due to rising consumer spending,  the relatively moderate inflation in June (0.66 percent m/m) can be taken as a sign that Indonesia's purchasing power is still rather weak. Another sign that indicates weak purchasing power is that the amount of cash in circulation in Indonesia during the Ramadan and Idul Fitri celebrations fell short of the central bank's initial estimates. Consumption of unsubsidized fuels, however, has nearly doubled.

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  • GDP Growth: Slowing Household Consumption in Indonesia is Worrisome

    GDP Growth: Slowing Household Consumption in Indonesia is Worrisome

    Efforts to raise people's purchasing power and household consumption in Indonesia will be key to push for higher economic growth in 2016. According to the latest data from Statistics Indonesia (BPS), Indonesia's gross domestic product (GDP) growth reached 4.92 percent (y/y) in the first quarter of 2016. Although this result failed to meet analysts' projections (which generally stood around 5 percent y/y), it was higher than the 4.73 percent (y/y) economic growth pace that was posted in the same quarter one year earlier.

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  • Disappointing Figure; Indonesia's GDP Growth at 4.92% in Q1-2016

    Disappointing Figure; Indonesia's GDP Growth at 4.92% in Q1-2016

    Economic growth of Indonesia was weaker-than-estimated in the first quarter of 2016. According to the latest data from Statistics Indonesia (BPS), released today (04/05), Indonesia's gross domestic product (GDP) growth reached 4.92 percent (y/y) in Q1-2016. Most analysts expected to see a GDP growth pace slightly above the 5 percent (y/y) mark and therefore the publication of BPS was disappointing and raises questions whether Indonesia's economic growth can in fact accelerate significantly in 2016.

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  • 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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Latest Columns Household Consumption

  • Further Slowing Economic Growth of Indonesia in the First Quarter of 2014

    Further Slowing Economic Growth of Indonesia in the First Quarter of 2014

    Statistics Indonesia (BPS) announced on Monday (05/05) that the economy of Indonesia - Southeast Asia's largest economy - grew at a much slower pace in the first quarter of 2014 than had been expected by analysts. Gross domestic product growth slowed to 5.21 percent (year-on-year) in Q1-2014, significantly down from the 6.03 percentage growth (yoy) that was recorded in Q1-2013. Gross domestic fixed capital formation (GFCF) slowed to 5.13 percent from 5.9 percent in the same period last year.

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  • Bank Indonesia Maintains Benchmark Interest Rate (BI Rate) at 7.50%

    The central bank of Indonesia (Bank Indonesia) decided to maintain its benchmark interest rate (BI rate) at 7.50 percent at the Board of Governors’ Meeting held on Tuesday 8 April 2014. The Lending Facility rate and Deposit Facility rate were held at 7.50 percent and 5.75 percent respectively. This policy is consistent with ongoing efforts to steer inflation back towards its target corridor of 4.5±1 percent in 2014 and 4.0±1 percent in 2015, as well as to reduce the current account deficit to a more sustainable level.

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  • Domestic Consumption, Smartphones and Social Media in Indonesia

    The high level of consumption in Indonesia is remarkable. In fact, household consumption in Indonesia is an important engine of economic expansion in Southeast Asia’s largest economy as it accounts for about 55 percent of economic growth. One of the most popular consumption products are gadgets, in particular mobile gadgets. Just take a look in urban environments in Indonesia; everywhere people are holding, playing with, and communicating through some sort of mobile technological device.

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  • What about Indonesia's Domestic Consumption in 2014?

    Recently, Statistics Indonesia (BPS) released various data in the context of Indonesia's gross domestic product (GDP). Economic expansion of Southeast Asia's largest economy slowed to 5.78 percent (year-on-year) in 2013. Household consumption accounted for the largest share of Indonesia's GDP (55.8 percent) and continued to grow significantly (5.28 percent yoy) in 2013. This consumer force is one of the main reasons why many foreign companies enter and expand their businesses in Indonesia.

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  • Analysis of Indonesia’s 5.62% Economic Growth Rate (GDP) in Q3-2013

    Indonesia will most likely not meet its original GDP growth target of 6.3 percent (stipulated in the 2013 State Budget). Yesterday (06/11), it was announced by Statistics Indonesia that Indonesia’s GDP growth figure in the third quarter of 2013 was recorded at 5.62 percent (year-on-year, yoy), the weakest quarterly growth figure since 2009 when the global financial crisis impacted on Southeast Asia’s largest economy. In 2013, Indonesia feels the global impact again, in combination with domestic factors.

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  • Indonesia's Economic Growth in Q3-2013 Expected to Fall below 5.8%

    Indonesia's Economic Growth in Q3-2013 Expected to Fall below 5.8%

    The slowdown of Indonesia's economic growth is expected to continue into the third quarter of 2013. The Indonesian government predicts that economic growth will fall below the GDP growth figure realized in the second quarter (5.8 percent). Acting Head of the Fiscal Policy Agency Bambang Brodjonegoro stated that the main factor that causes the country's slowing economic growth in Q3-2013 is reduced household consumption. Domestic consumption in Indonesia accounts for about 55 percent of the country's GDP growth.

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  • Indonesian Government Releases Official GDP Growth Figure for the Year 2012

    An official at Indonesia's Finance Ministry announced today that Indonesia's gross domestic product (GDP) grew by 6.23% in 2012, thus failing to meet the government's revised target of 6.3-6.5%. Factors that contributed to Indonesia's lower than expected economic growth last year were weak exports due to poor international trade and non-optimal government spending. On the positive side, all sectors of the Indonesian economy experienced growth.

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