Ed Sunarpo
Publications
MacroAcres Research2025

Indonesia's Struggle with Slowing Consumerism

Indonesia's slowing consumption is weighing on growth as weaker household spending, rising layoffs, and a shrinking middle class put pressure on the economy.

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Findings

  1. 01Indonesia's Q1 2025 growth slowed to 4.87%, with weaker household consumption emerging as a key drag on an economy where consumption accounts for over half of GDP.
  2. 02Rising layoffs and a shrinking middle class are weakening consumer confidence, creating a feedback loop between lower household spending, weaker business revenues, and further job losses.
  3. 03With consumer savings falling to their lowest levels since 2021, households are prioritising necessities over discretionary spending, putting consumer-facing industries under pressure.
  4. 04Lower interest rates and planned government stimulus could provide a near-term recovery, but restoring consumer confidence and employment remains critical to breaking the slowdown.