The Indonesian Chamber of Commerce and Industry (Kadin) responded to the slowdown in household consumption and economic growth in the second quarter of 2024. Data from the Central Statistics Agency (BPS) stated that Indonesia's economic growth in the second quarter of 2024 was 5.05% (YoY), a decline when compared to economic growth in the first quarter of 2024 of 5.11% (YoY).

Meanwhile, household consumption in the second quarter of 2024 grew by 4.93% YoY, down from the performance of the same period last year which reached 5.23% YoY.

Chairman of Kadin Indonesia, Arsjad Rasjid acknowledged that the slowdown in the economy and household consumption occurred due to a decline in domestic demand in the second quarter of 2024 when compared to the previous quarter. Seasonal factors such as Ramadan and elections that shifted in the first quarter/2024 period have affected consumption in the second quarter of 2024.

‘This year, a lot of spending related to Ramadan and Eid occurred earlier in the first quarter, which is different from the previous year,’ said Arsjad (5/8/2024).

In addition, he continued, entrepreneurs also saw that the slowdown in Manufacturing PMI in July 2024 was due to global external pressures such as geopolitics which had also hit domestic consumption in the second quarter of 2024. Moreover, external challenges such as the Fed's interest rate era have not slowed down to make the Rupiah exchange rate weaken further.

‘The slowdown also occurred in terms of demand from Indonesia's main markets, such as China,’ said Arsjad.

Nevertheless, Arsjad said that economic growth in the second quarter of 2024 of 5.05% still reflected domestic economic stability. He also admitted that he was still optimistic about the prospects for growth in the next quarter, with a note that the government needs to make efforts to maintain the purchasing power of the lower and lower middle class. Entrepreneurs are also hoping for an opportunity to adjust the benchmark interest rate to support further economic growth. This is because high interest rates have also made productive and consumptive credit more expensive.

‘We hope that the government and Bank Indonesia can continue to coordinate in monitoring external developments,’ he said.