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ndonesia’s emerging market success story is facing a remarkable challenge in the era of COVID-19. Consumer sentiment will play an important role in determining the nation’s economic trajectory in the wake of this global pandemic.

Boston Consulting Group’s (BCG) Center for Consumer Insights engaged with more than 1,500 citizens across Indonesia in over 45 categories to understand behaviors and perceptions during this time of unprecedented disruption. This study revealed Indonesian consumers have a cautious short-term outlook, with 87 percent of respondents noting their fear of COVID-19, the most cautious in Southeast Asia. This fear was tempered by optimism, with 79 percent of respondents believing the economy will improve within the next year. That compares to just 44 percent in regional neighbor Thailand.

Consumer sentiment represents a leading indicator that will be key to the nation’s post-COVID-19 recovery. There is no question that consumers have pulled back spending during this crisis, and this will take a reasonable time to recover. However, when we compare Indonesian consumers to those in other markets, we see five trends that demonstrate resilient consumer optimism and offer a glimmer of a silver lining for Indonesia.

Balanced spending outlook

While mature markets across the world are facing a startling collapse in consumer intent to spend, Indonesian consumers evidenced a more resilient spending outlook.

Consumer intention to spend decreases as well as increases across different categories, resulting in a 4 percent net decrease in expected consumption in Indonesia. That figure is modest compared to an 18 percent in Italy and 16 percent in the United States.

This story represents a broader picture of emerging vs. mature market consumers in response to COVID-19. BCG analysis of 25,000 consumers across 15 mature and emerging markets shows emerging market consumers retain an enduring optimism about their economic futures, with plans to still increase spending in far more categories than their mature market peers.

Health and wellness focus

COVID-19 is inspiring a focus on global wellness that is driving significant changes in consumer spending. While the negative impact on spending in travel, hospitality and fashion is resulting in challenging economic decisions for these industries, wellness products, fresh food, and preventative healthcare benefit from a more positive consumer outlook.

Two-thirds (65 percent) of Indonesians expect to spend more on vitamins, minerals and herbal supplements in the next six months. More than half of Indonesians expect to spend more on fresh foods, and groceries and staples.

Preventive healthcare is another focus, with over one-third of Indonesians planning to spend more on these services in the next six months. As we all strive to be fitter in response to COVID-19, indications are that Indonesian consumers expect to spend for that benefit.

Transforming finances

This global health crisis has triggered a financial services revolution in Southeast Asia that may have lasting repercussions for financial access and consumer opportunity.

An estimated US$23 trillion of global payments are predicted to shift online in the coming decade. Platforms like GoPay and OVO demonstrate strong expansion in this space in Indonesia, marking the country as a growth market for e-wallet technology. COVID-19 is accelerating this shift, particularly in previously hesitant demographics. Over half of millennials (26-40) expect to use e-wallets more in the next six months. Perhaps more importantly for future e-wallet growth, 45 percent of respondents aged above 50 expect to do the same.

This crisis has also inspired growth in traditional financial products among the younger generations. Of Indonesia’s Generation Z, i.e. those aged 18-25, 21 percent expect to spend more on life insurance in the next six months and 22 percent expect to spend more on investment accounts.

Telecoms and connectivity

The shift to remote working has been the iconic story of business transformation during COVID-19, but connectivity also reflects a human need to contact friends and access entertainment. One-third of Indonesians expected to spend more on mobile services in the six months ahead.

Over 170 million people in Indonesia, just under two-thirds of the population, currently have access to the internet. A significant share of that number use smartphones as the primary source of access. But BCG’s study reveals 23 percent of Gen Z, 28 percent of millennials, and 27 percent of older generations expect to spend more on fixed broadband in the coming months.

Of those who expect to spend more, 76 percent of mobile and 68 percent of fixed broadband customers cite remote working as the reason. Entertainment is another key concern, as is an expectation of accessing deals, discounts and promotions. Consumer opportunity is increasingly connected for Indonesians, providing a demand for digital and enhanced data services which may well flourish beyond this current crisis.

Driving digital commerce

With physical access to shops restricted by lockdown measures, and hesitations about exposure to the virus, it may seem obvious that digital commerce and on-demand services are enjoying a surge in demand in Indonesia. Nine out of 10 Indonesians noted a lifestyle change to avoid public places during the COVID-19 outbreak, and 80 percent have reduced or delayed plans for in-store spending. This is creating an online shift where consumers increasingly research and complete purchases through digital channels.

This shift is not without precedent. The 2003 Severe Acute Respiratory Syndrome (SARS) epidemic in China is widely cited as the trigger for a sweeping e-commerce transformation in China, laying the foundations for the rise of global giants like Alibaba. Just 12 percent of the Indonesian population shopped online as of 2018. Projections had previously estimated that e-commerce revenues in Indonesia could grow from $1.7 trillion in 2015 to $46 trillion by 2025. While the near-future will be challenging, COVID-19 could be a spark that accelerates that significant market opportunity.

Consumer sentiment is resilient in Indonesia

Economic growth will rightly take a backseat to human concerns for nations around the world in the months ahead. But consumer sentiment will play a vital role in the health of economies during the recovery period and beyond.

Indonesia is experiencing a disruptive shift in consumer habits during this crisis. There is no doubt that will make for challenging conditions for many. But there is an opportunity to anticipate and embrace new opportunities during this crisis.

Indonesian businesses should prepare for the eventual rebound ahead, cautiously buoyed by resilient consumer sentiment. COVID-19 is already changing the profile of consumer spending and behaviour. It’s important that businesses recognise these changes, while continuing to assess how consumer intentions might adapt as the impact of COVID-19 evolves.

COVID-19 may cast a shadow over Indonesia’s journey in the coming months and years, but the resilience of national consumer sentiment offers a glimpse of a silver lining which will be vital in the long road ahead.