Omicron Reduces Purchasing Power

The Central Statistics Agency (BPS) noted that household consumption during the past year only grew at 2.02%, much lower than the pre-pandemic level of around 5%.

This data reflects that people's purchasing power in the second year of the Covid-19 pandemic is still quite fragile. As for this year, economists are pessimistic that the government will be able to accelerate household consumption in line with the lack of action by policymakers to stem the spread of the Omicron variant. In fact, household consumption has so far been the backbone of economic growth and has a very large portion of the national gross domestic product (GDP). Executive Director of the Center of Reform on Economics (Core) Indonesia, Mohammad Faisal, said that although the economy throughout the past year had been in positive territory, it had not legitimized the robustness of household consumption. This is due to limited job creation after the economy faced the second wave of Covid-19 in the middle of last year so that the income of the lower middle class is still quite limited. “Even if there is job creation, it's mostly from the informal sector whose purchasing power is of low quality. This year is the same,” he explained. Second, the upper class prefers to hoard their funds in banks, which is reflected in the continued increase in third party funds (DPK). In fact, the income of the upper class has actually recorded an increase in line with the start of several business sectors in the country. This has also encouraged the accumulation of funds in banks to start to increase.

|•SOURCE•| Articles :BISNIS | Image :KUMPARAN |

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