I

ndonesia'€™s retail sector may miss its sales target this year as slower economic growth could significantly weaken people'€™s purchasing power, a retail business group says.

Retailers in Southeast Asia'€™s biggest economy have aimed to book Rp 165 trillion (US$14.12 billion) in sales this year, up by around 10 percent from last year.

Out of that figure, around a 60 percent share will be collected in the second half of this year, according to the pattern each year.

The market outlook seemed gloomy, with retail sales looking to expand by only 8 percent to Rp 97.2 billion from July to December, lower than the Rp 99 billion projected to meet the whole-year target, Indonesian Retailers Association (Aprindo) executive director Tutum Rahanta said.

That might occur despite a major boost from some festivities '€” Idul Fitri in July, Christmas and New Year '€” when consumption usually peaked, he added.

The Muslim festive season alone normally sees sales of retail products, particularly non-food items like clothes and footwear, double or even triple from the regular months throughout the year.

'€œSeveral industrial sectors that support people'€™s purchasing power decelerate. People are now tightening their budgets for consumption as they have felt the impact of the slow down,'€ Tutum told The Jakarta Post in a phone interview.

The growth might be equally generated from both the food and beverage sectors and the non-food and beverage sectors, mostly fashion, he explained.

Indonesia, the world'€™s fourth most populous country, has increasingly served as a lucrative market for low- to high-end retailers like Ramayana, Matahari and Mitra Adi Perkasa.

The country'€™s consumer class is expected to triple in size to 135 million people by 2020 and will spend $1 trillion more each year than it does at present, a McKinsey & Company report has shown.

However, the economy grew by only 5.12 percent in the second quarter of this year, the lowest level in five years, primarily driven by monetary tightening that the government designed to manage the wide current account deficit and tame inflation.

As economic activities shrank, retail sales expanded by only 8 percent to Rp 64.8 trillion in the first half of this year, driven mostly by food and beverage consumption due to widespread election campaigns.

Officials have been upbeat that the economy can pick up to at least 5.4 percent in the third and fourth quarters on the back of government expenditure and exports.

Tutum said there was still the potential for game changers that could help boost the domestic retail market in the second half of the year, which would be left to the newly-elected government.

'€œThe new government may issue policies that will boost the business sectors. This will bring positive sentiment to investors,'€ he said, citing potential capital inflows and an appreciation of local currency.