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Consumer shift behind spending slowdown: Analysts
The growth of household spending, which accounts for more than half of the country’s gross domestic product (GDP) fell to 5.01 percent yoy in the third quarter.
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Shopping pattern: People choose outfits that are available during launching of Ikat Indonesia at The Goods Dept. on Friday, March 1, 2019 at Pacific Place, South Jakarta. (JP/Ni Nyoman Wira)
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s consumer spending growth cools, retail sales slump and car sales slow, many have questioned if domestic consumption is in a decline but economists and businesspeople have expressed confidence that the trend is just a reflection of a shift in customer behavior.
University of Indonesia economist Faisal Basri said the softening consumer spending growth merely showed that demand was shifting to other goods.
“Clothes and shoes sales may have been [growing] more slowly this year, but people are spending their money more on phone credit or gadgets,” he said during a discussion in Jakarta on Wednesday.
Statistics Indonesia (BPS) data show the transportation and communication component, which is a segment of consumer spending, grew 4.35 percent year-on-year (yoy) in the third quarter compared with 4.69 percent in the second quarter. Meanwhile, clothes and footwear growth slowed at 3.99 percent versus 5.06 percent in the second quarter.
The growth of household spending, which accounts for more than half of the country’s gross domestic product (GDP) fell to 5.01 percent yoy in the third quarter from 5.17 percent in the previous quarter, BPS data show. The figure is relatively stagnant compared with the 5 percent growth booked in the third quarter last year.
The cooling consumer spending, amid weakening exports and lower investment, has dragged on Indonesia’s economic growth, which stood at 5.02 percent in the third quarter, the slowest in more than two years.
Consumers are shifting their spending habits and are now looking for value for money rather than prestige in a product, said Kalbe Farma president director Vidjongtius. He revealed that the publicly listed pharmacy company’s mid-segment product sales booked higher growth compared to the premium ones.
