The country's biggest MSME lender says that small businesses recorded a major sales slump in the third quarter, primarily due to weakening consumer spending and partly due to the rollback of COVID-related government assistance, leading to a rise in the NPL ratio for the sector.
mall businesses have seen a steep decline in sales amid weakening consumer spending, according to an executive at state-owned lender BRI, which has translated into worsening loan quality in the sector.
Supari, director of micro business at the country’s largest lender for micro, small and medium enterprises (MSMEs), said on Wednesday that sales of small businesses nationwide had plummeted between 40 and 60 percent as households curbed spending, partly due to the rollback of pandemic-era social assistance programs.
“Everywhere the story is the same, business owners are seeing their sales drop drastically. Like it or not, this is the reality for these small businesses now,” Supari said, as quoted by Bisnis.com.
Indonesia’s third-quarter GDP report, released on Nov. 5 by Statistics Indonesia (BPS), shows a 4.91 percent year-or-year (yoy) slowdown in the contribution of consumer spending to GDP growth, from 4.93 percent in the second quarter and 5.06 percent in the third quarter of 2023.
This translates into overall economic growth of 4.95 percent in the third quarter this year, dipping below the usual 5 percent average.
BRI's internal surveys indicated that the cessation of some government assistance had led to weakened consumer spending since last year, after spending bolstered steadily from 2020 to 2022, said Supari.
“Perhaps social assistance needs to be increased by Rp 100 trillion [US$6.36 billion],” he continued, echoing recent remarks by Coordinating Social Empowerment Minister Muhaimin Iskandar on possibly expanding next year’s social aid budget to stimulate household spending.
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