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Tatan Syuflana/AP
The Indonesian Economy Is Projected To Grow By 5.03 Percent In 2024; However, The Purchasing Power Of The Population Remains Sluggish
Monday, 10 Feb 2025
Economic growth is projected to be 5.03 percent in 2024, indicating a slowdown compared to the previous year. This trend suggests a weakening purchasing power among the populace. Nailul Huda, an economist from the Center of Economic and Law Studies (Celios), noted that last year's economic growth exceeded 5 percent, largely supported by a significant increase in consumption by Non-Profit Institutions Serving Households (LNPRT), which surged by 12.48 percent. In contrast, household consumption grew by only 4.94 percent, remaining below the anticipated economic growth for 2024. Although this growth rate is higher than the 4.82 percent recorded in 2023, it still reflects a sluggish purchasing power in 2024.
"Household consumption has not surpassed 5 percent growth, indicating a decline in purchasing power in 2024," he stated to Kompas.com, as reported on Thursday, February 6, 2025. Consequently, Huda emphasized that the weakening purchasing power will continue to overshadow the national economy this year.
Moreover, with no upcoming general elections or regional elections in 2025 to stimulate consumer spending, the government may find it challenging to achieve an economic growth target of 5.2 percent. "The only hope lies in implementing policies that effectively boost purchasing power," he remarked.
Additionally, Wijayanto Samirin, an economist from Paramadina University, pointed out that the previous year's weak purchasing power was also evident from the deflation experienced over five consecutive months. According to data from the Central Statistics Agency (BPS), there were consecutive monthly deflation rates from May to September last year, recorded at 0.03 percent, 0.18 percent, 0.08 percent, 0.03 percent, and 0.12 percent, respectively. "The purchasing power in 2024 remains weak, as evidenced by the five-month deflation. The growth of household consumption falling below GDP growth is a clear indication," Wijayanto stated.
