Indonesia's economic growth to impact Ramadan

Date : 06 July 2015

Amid a slowing economy and declining consumer confidence, the Indonesia Retailer Association is already forecasting a slowdown in sales growth during the current Ramadan period.

Consumer confidence slowed again in June

Indonesia recorded its slowest economic growth in five years at 4.7% in Q1 of this year. In line with this consumer confidence declined over the same period, before rising in May, but then dropping again in June amid concerns over employment security. As a result of this retailers are predicting a decline in sales growth of up to 36% during the Muslim holy month of Ramadan, with sales between 18 June and 17 July expected to reach just IDR 15tn (US$1.12bn), down from IDR 25tn (US$1.87bn) during the same period last year.

Grocery retailers expected to be less affected

Although the Indonesia Retailer Association's estimates include retailers such as Matahari and Alfamart, growth at Indonesia's grocery retailers will probably be impacted less compared with general merchandise vendors. In fact, Matahari is forecasting 11% sales growth during the period, aided by its expansion into the eastern part of the country. The Central Bank expects both the economy and consumer confidence to bounce back over the next six months in line with declining food and clothing prices.

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