Consumer spending in Indonesia to see ‘solid growth’ in 2022
This comes as Indonesia further eases pandemic-related restrictions.
Consumer spending in Indonesia is expected to post a “solid growth” in 2022 as the government eases pandemic-related restrictions, Fitch Solutions reported.
In a report, Fitch projected the real household spending in the country will climb by 7.6% over 2022 to a total of IDR9.9t (US$692b). This is up from the estimated 4.1% growth in 2021.
“The uptick in consumer spending growth over 2022 will come as the wider economy recovers facilitated by the country’s ongoing vaccination drive and improved resistance amongst the population, making disruptive lockdowns less likely in 2022,” the report read in part.
“Over 2022, consumer spending growth will begin to moderate, as the Indonesian consumer continues its recovery from the contraction in 2020.”
In the same report, Fitch noted it expected retail sales to sustain a positive growth this year as Indonesia authorities relax restrictions as well as reopen its borders to international travel.
Retail sales in the country grew 0.8% in 2021 due to the low-base effect. This followed an 11.7% contraction recorded in 2020.
In particular, sales grew 10.4% on average from October to December 2021, whereas it contracted 16.8% in the same period in 2020.
“This high-frequency data suggests that while retail sales in Indonesia have still not recovered to pre-Covid-19 levels when comparing retail sales in 2021 to that of 2019, there is an uptrend in retail sales growth going into 2022,” Fitch said.
It added that on top of the relaxed restrictions and reopening of borders, the higher vaccination rate in the country could also drive a broader recovery in retail sales from 2022 onwards.