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Emergency curbs to set back retail recovery: Fitch
Credit rating agency Fitch Ratings is expecting mini-market operators such as Alfmart to fare better than their big counterparts like Hypermart and Hero Supermarket under the emergency restrictions.
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An Alfamart convenience store in South Tangerang, Banten. (JP/Evi Mariani)
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mergency mobility restrictions across Java and Bali are expected to hamper the recovery of grocery retailers, potentially weakening domestic retail sales that only recently returned to pre-pandemic levels.
Credit rating agency Fitch Ratings forecast retail sales to weaken in the third quarter (Q3) of the year but rebound by the fourth quarter, making up for the Q3 losses, assuming the emergency restrictions are not extended and that the government successfully accelerates the country’s vaccination campaign.
“Reduced movement will pressure the country’s retail sector temporarily,” the agency stated in a press release on Sunday.
The restrictions will likely hit Indonesia’s retail sales index (RSI), a gauge of the industry’s performance, that only returned to a pre-pandemic level in April, when it reached 220.4 points, the first time the figure rose above 200 points since March last year.
Read also: Fragile economic improvement must not be disrupted: Retail association
The current emergency public activity restrictions (PPKM Darurat) across the two islands, which hold over 61 percent of the population, are slated to run from July 3 to 20 but the government may extend them to bring down daily new caseloads to 10,000.
Under the restrictions, all shopping malls will be closed but supermarkets, traditional markets and stores selling basic commodities – including those located inside malls – are allowed to operate at 50 percent visitor capacity until 8 p.m.
