Indonesia to see retail sales recovery in Q2

The country’s consumer confidence saw a slight month-on-month uptick in February.

Indonesia’s retail sales are expected to see a recovery in Q2 after the numbers fell to their lowest levels in February. This is expected to be driven by the government's compulsatry vaccination drive, whcih started in mid-Janurary, according to a report from Fitch Solutions.

The country’s consumer confidence fell 27% YoY in February amidst the soaring number of daily COVID-19 cases recorded in the country during the first two months of the year. However, it saw a slight uptick to 85.8 during the month, compared to 84.9 January.

“The consumers felt more confident in February 2021 due to their perception of current economic conditions, and expectations of economic conditions moving forward, remaining positive and relatively stable, which is bolstered by expectations of incomes over the next six months,” the report stated.

At the same time, household spending in Indonesia is expected to begin to recover in 2021, growing by 5.8% YoY, amidst the rollout of vaccines after the pandemic led to an estimated contraction of 1.0% in 2020.

All main consumer spending categories are projected to return to positive growth in 2021. Food and non-alcoholic drink spending were prioritised in household budgets in 2020, and so growth in spending on these items, while remaining positive, will be slightly lower during the year.

Meanwhile, spending within other categories are estimated to have recorded significant contractions over 2020, as households cut spending on non-essential items. As such, these categories will grow from a relatively lower base over 2021.