Market Gloom is Plaguing Indonesians Ahead of the Significant Eid Holiday

Ahead of one of the most important holidays in Southeast Asia, Indonesia’s market turbulence is exacerbating economic concerns that dampen the mood of businesses, consumers, and individual investors.

Ahead of one of the most important holidays in Southeast Asia, Indonesia’s market turbulence is exacerbating economic concerns that dampen the mood of businesses, consumers, and individual investors.

The “nerve-racking” decline in Indonesian equities, according to Benedicta Alvinta, a freelance marketing strategist in Yogyakarta, central Java, affected her investment portfolio, which was mainly composed of shares, followed by government retail bonds, mutual funds, and gold.

In the long run, like many others, I’m less optimistic about the economic future, so I’m more cautious when investing, but I still think the stock index will return, she added. The 29-year-old is delaying plans to remodel her house and Purchase new furnishings as part of her spending restraint.

Amidst declining trust, tens of millions fewer Indonesians are expected to go to Java, Sumatra, Borneo, and other islands in the archipelago this year for the Eid al-Fitr holiday season. Concerns have increased due to President Prabowo Subianto’s budget cuts, populist expenditure pledges, and unclear policies.

The rupiah fell to its lowest level since the Asian crisis of the late 1990s on March 25, and the Jakarta Composite Index, which just had its worst intraday fall in over ten years, is among the worst performers globally this year. Now that the Muslim month of Ramadan concludes, local marketplaces are taking a breather by closing for almost a week.

The transport ministry predicts that 146 million people will travel this year, which is more than 45 million less than last year, making the roads less crowded than usual at a time when people’s wallets are lighter and economic news is bleak. In recent months, various factors have affected families, including lower nickel prices, the decline in the rupiah value, and layoffs in the nation’s colossal textile sector.

The chairperson of the Indonesian Employers’ Association, Shinta Widjaja Kamdani, cited the devaluation of the rupiah last month as the reason for the increase in raw material costs. She added, “Higher input costs will erode margins and may push up selling prices.” As a result, “people’s purchasing power may decline, and overall economic growth may be weakened.”

The cost of salmon, one of her most popular dishes, has increased by almost 15% this month alone, according to Disfiyant Glienmourinsie, owner of the South Jakarta food catering company Dapur Makaro.

“They apologized to me when I went to Purchase two weeks ago and said salmon prices were going up,” she claimed Thursday. After paying the supplier, she changed to inferior packaging to maintain her catering rates.

“Even though my profit margin isn’t 100% anymore, I can still manage,” she stated. “I don’t want to sacrifice the food’s quality or quantity.” It’s not all bad news. Major banks announced increased dividend distributions this week, which gave Indonesia’s more than 15 million ordinary investors some hope. Hundreds of people attended shareholder meetings; some streamed live on TikTok.

Some shareholders arrived five hours before the meeting to guarantee seats inside PT Bank Mandiri’s flagship office in downtown Jakarta, where a queue stretched for a block on Tuesday. The lender had the most significant payout ratio in its history.

Another issue is consumer confidence. In the first two months of the year, imports of consumer products decreased by 20%, and according to Bank Indonesia, retail sales declined in February for the first time since April of last year. This is the case even though the administration announced an increase in the minimum wage and essentially abandoned plans to raise sales taxes.

According to Solihin, head of the Indonesian Retail Merchants Association, “Several government stimulus measures have helped support purchasing power, but it does not appear significant enough.” He said that customers’ purchasing power declines; they increasingly choose less expensive products, especially those in fast-moving consumer goods. According to caterer Glienmourinsie, her clients appear to have less money this year.

“With the Eid al-Fitr holiday, it’s a festive season right now, but I can see the difference compared with previous years,” she remarked. “Compared to last year, demand has decreased by at least 25%.” With help from Eko Listiyorini and Tassia Sipahutar.