Entering Ramadan, Indonesia's Economy Has A Chance Above 5 Percent In The First Quarter Of 2024

Rupiah illustration (Photo: dock. Antara)

JAKARTA - Head of Bank Permata Economist Josua Pardede said the Consumer Confidence Index (IKK) in general could indicate how strong the public is in consuming, so that it is associated with perceptions of economic conditions.

For information, based on a survey by Bank Indonesia in February 2024, the Consumer Confidence Index (IKK) was at the level of 123.1, this figure decreased when compared to the position in January 2024 which was 125.0.

Josua said that although the IKK in February fell, the IKK was still above 100, which means that the public remains optimistic and consumption activities will continue.

According to Josua, when it comes to growth in the first quarter of 2024, there is actually still an opportunity for the Indonesian economy to grow above 5 percent because in March it has entered the month of Ramadan where usually consumption will strengthen seasonally so that it will be able to support household consumption which contributes more than 50 percent to GDP

"However, seeing that the IKK in February 2024 tends to decline, especially due to the Economic Condition Index (IKE), the government needs to take several steps," he explained to VOI, Wednesday, March 13, 2024.

Josua conveyed that IKE fell in all factors, namely current income, job availability, and purchasing derivative goods. We see this happening because of the increasing food inflation factor.

In addition, a lower salary increase from food inflation and the implementation of a new income tax, namely TER PPh 21 makes income feel reduced.

According to Josua, the reduced purchase of utility goods, which is a type of secondary and tertiary item, is also natural because food is a primary item, which if the price goes up, consumers will sacrifice the purchase of other types of goods.

"At the same time, government policies are still focused on low-income groups and almost none in the middle-income class," he said.

Josua said this was also in line with IKK per expenditure group, where the income group of IDR 1 million-IDR 2 million experienced an increase in IKK while other income groups above it decreased.

According to Josua, this is in line with the government's social assistance program to the poor. Of course, the government must start designing policies to help the purchasing power of the middle class and immediately reduce food inflation because otherwise it is possible that the momentum of Ramadan and Eid will increase, where not only primary, but secondary and tertiary consumption will increase, it could be disrupted due to the food inflation factor.

"We see that the economic challenge in the Ramadan period is controlling food inflation in the midst of supply being disrupted by El Nino, extreme weather, and disruption of distribution channels, but demand is increasing seasonally," he said.