Indonesia Consumer Trends 2024

As Southeast Asia’s largest economy, Indonesia is poised for remarkable transformation in 2024. With a stable GDP growth rate of 4.95% in Q3 2024 and an expanding middle class, the nation is balancing traditional economic drivers with burgeoning digital innovation. The Indonesia Consumer Trends 2024 article delves into the key trends shaping Indonesia’s consumer landscape, offering insights for businesses and investors. Cimigo offers eight reasons why Indonesia will prosper in the next decade.

1. The demographic dividend

Indonesia’s young and productive population is a critical growth driver. With 69% of its 281 million citizens in the working-age group, the country benefits from a low dependency ratio of 0.6 per worker. Urbanisation, projected to reach 60% by 2025, is reshaping consumption patterns and increasing demand for modern goods and services.

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2. Indonesia’s economic growth: stability amid challenges

Despite global headwinds, Indonesia’s economy has maintained steady progress. In Q3 2024, GDP grew by 4.95%, driven by robust domestic consumption and investment. Cimigo estimates that the GDP growth for 2024 will be at 5.0%

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The growth outlook, however, varies across regions. Central and Eastern Indonesia are emerging as significant contributors, reflecting efforts to address income inequality traditionally concentrated in urban areas like Java. Income disparity continues to be a challenge, particularly in urban centres. The Gini coefficient has risen slightly in cities, underscoring the importance of government initiatives aimed at spreading growth beyond metropolises.

3. Travel and leisure resurgence

The travel industry has rebounded robustly post-pandemic, driven by the ‘revenge travel’ phenomenon. International tourist arrivals rose by 15.4% year-on-year in Q3 2024, with domestic travel increasing by 18.6%.

Online bookings for flights and accommodation are surging, supported by platforms that cater to a digitally savvy audience. Bali and Papua Highlands are among the provinces witnessing the highest growth in tourism.

4. Stable business sentiment and increased investment

Indonesia’s business environment remains optimistic. The Business Tendency Index (BTI), which reflects business owners’ expectations, has shown consistent positivity in 2024, following a strong post-pandemic recovery.

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Cimigo observes that domestic and international investments are split almost evenly, with key sectors such as telecommunications, mining, and pharmaceuticals drawing the most interest. International investors, particularly from China and Singapore, remain pivotal players, contributing to infrastructure and industrial growth.

5. Inflation remains manageable amid retail recovery

Inflation has been carefully managed in 2024, maintaining stability despite global economic fluctuations. Retail recovery is driving growth, with a 7.4% year-on-year increase in sales by September 2024.

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The food, beverages, and tobacco sectors have been key drivers, while e-commerce continues to gain traction as a preferred retail channel. Grocery shopping online has increased, marking a shift in consumer habits towards convenience-driven digital platforms.

6. Evolving Indonesia consumer behaviours

Rising affluence among Indonesian households is reshaping spending habits. The middle class, which dominates the population, is increasingly focused on value-driven purchases as economic uncertainty curtails luxury spending. Top financial goals for 2024 include saving for emergencies and reducing unnecessary expenses.

Personal investments remain conservative, with 69% of consumers preferring savings accounts, while gold and mutual funds follow as secondary choices. Cryptocurrency adoption, though present, remains limited due to market volatility.

7. Digital transformation in commerce

Indonesia’s digital economy continues to thrive, expected to reach $90 billion in 2024, with e-commerce leading the charge. Platforms like Shopee dominate online retail, while digital wallets account for 39% of all e-commerce transactions. Buy Now, Pay Later (BNPL) services have also gained traction, enabling consumers to manage their finances amid rising costs.

Indonesia Digital Consumer Economy Trends

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Indonesians spend an average of 7 hours and 38 minutes online daily, with e-commerce adoption reaching 89% among urban users. Key categories driving growth include electronics, food, and beverages, reflecting evolving digital consumer preferences.

8. Government initiatives driving growth

Indonesia’s leadership is channelling resources into ambitious programmes such as Nusantara, the new capital city. This project symbolises Indonesia’s commitment to reducing regional economic imbalances and decentralising growth away from Java.

Cimigo noted that policies aimed at fiscal stability include maintaining the budget deficit below 3% and plans to raise the VAT rate to 12% in 2025. These measures aim to bolster state revenue while balancing economic expansion and consumer spending.

Looking ahead for Indonesia

Cimigo believes that Indonesia in 2024 stands at a critical juncture, balancing demographic advantages, digital innovation, and strategic government policies. For businesses and investors, the opportunities are immense, from tapping into the expanding digital economy to aligning with consumer preferences in a rapidly urbanising market.

As the nation embarks on its growth journey, staying attuned to these trends will be pivotal in navigating and leveraging Indonesia’s vibrant consumer landscape.

These are the eight reasons why Indonesia will prosper in the next decade.

Substantial productive age labour force with a low dependency ratio.
Q3 2024 GDP growth reached 4.95%.
Domestic and international travel continues to grow.
Stable business sentiment and increased investment.
Inflation remains manageable as the retail industry steadily recovers.
Household affluence keeps growing.
Digital growth continues.
Government initiatives for economic development.

For more detailed analysis, please download the Indonesia Consumer Trends 2024 report here.

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