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ASEAN Consumer Sentiment Study 2023 (Indonesia): Digital finance sees sharp growth
Indonesia is shaping up to be one of the world’s fastest-growing economies in the decade to come. Having hit a nine-year high in GDP growth in 2022, the country is poised to leapfrog Russia as the world’s sixth largest economy by 2026.
While financial worries have risen among Indonesians – such as not being able to save more money – the country’s economic momentum reflects the optimism that they have about the future. According to the ASEAN Consumer Sentiment Study 2023 – Indonesia report, nearly three in four expect to be financially better off in the coming year.
Staying optimistic amidst recession concerns
Though positive sentiments in the country have dipped from last year, Indonesians remain the most optimistic amongst their ASEAN counterparts.
Eighty-eight per cent of consumers say their current mood is positive – significantly higher than the regional average of 77 per cent. Moreover, over six in 10 feel “grateful” and “optimistic” about their economic situation today. Gen Y and Mass consumers are particularly confident, with nearly four in five expecting their financial situation to improve next year.
Interestingly, this sanguine outlook may seem at odds with Indonesians’ expectations of a recession. Seven in 10 consumers foresee their country entering a major recession in the next six to 12 months. Yet, 68 per cent also report feeling positive about the future performance of Indonesia’s economy.
Such sentiments may be a reflection of Indonesia’s solid economic growth despite global headwinds. Bucking forecasts of weakening growth, the country’s GDP accelerated in the first and second quarter of 2023. This was driven by strong government spending and household consumption.
Consumers are becoming more conservative with their finances
As global uncertainty drives rising costs, Indonesians are grappling with price surges in essentials like fuel, rice, and cooking oil. Unsurprisingly, three in four consumers say they are concerned about their finances – 23 per cent higher than respondents of the previous year. Rising inflation and household expenses top the list of concerns for Indonesians.
In particular, higher food costs resulting from supply chain disruptions and extreme weather conditions have driven inflation to a seven-year high in Indonesia. This is reflected in the increased spending for household groceries, where 41 per cent of respondents have reported a higher expenditure. On the other hand, spending on jewellery and leisure travel has reduced.
In the face of rising costs, saving money is top of mind for Indonesians. Forty-four per cent are worried about their ability to put money aside for savings – the highest in the region. This is followed by concern over the ability to afford essential items (35 per cent) as well as to put money aside for investment (33 per cent). For Gen X, paying for their children’s education needs remains a key concern (40 per cent).
Such uncertainties have led to a shift in financial behaviour, with 40 per cent of Indonesians willing to save more – higher than the regional average of 34 per cent – as they adopt a conservative stance with regards to expenses.
Harnessing tech to track and manage finances
Digital banking adoption is accelerating in Indonesia, and consumers are turning to data insights from online banking platforms to monitor their finances. In fact, 73 per cent of Indonesians use online banking apps and services, a 25 per cent increase compared with the previous year. This upward trend holds true across all age and class segments.
In line with a greater focus on savings and investment, more than one in two consumers spend time researching products that offer deals, savings, and rewards. Forty-five per cent also say they now rely more on online sources of information to guide their investment decisions.
Indonesians are leading the region when it comes to utilising digital payment platforms. Photo: Getty Images
Indeed, there is strong potential for platforms that can consolidate banking and financial information in the Indonesian market. Eighty-three per cent of Indonesians would be comfortable sharing and consolidating financial data in one platform, and this is consistent across all age groups. Easy access to financial information and improved financial planning are the key benefits of such a platform for Indonesians.
Consumers have also strongly embraced digital payments. Indonesians top the region in their use of various digital payment methods: e-wallets (79 per cent), peer-to-peer payment services (73 per cent), e-commerce payment platforms (66 per cent), and mobile banking through a banking app (66 per cent).
Out of those who use e-wallets, four in five consumers use it at least once a week. Consumers cite convenience and ease of use as the top reasons for choosing these payment methods.
Sustainable behaviours are on the rise
Compared with other markets, Indonesians are becoming more eco-conscious in their everyday habits. Consumers regularly adopt these top three sustainable behaviours: using reusable bags instead of plastic bags when shopping (61 per cent), cutting down on food waste (58 per cent), and switching to energy-efficient lighting and appliances (53 per cent).
While only 26 per cent of Indonesians regularly pay more for sustainably produced products at the moment, they are keen to understand how their daily spending impacts carbon emissions. In fact, 95 per cent say they are likely to spend more on sustainable food, beverages, and groceries.
Another nine in 10 reported being likely to spend more on sustainable home and personal care, along with sustainable apparel. This willingness to spend on sustainability is inspired by the need to protect our planet for future generations (65 per cent) and wanting their children to have a better future (64 per cent).
When it comes to sustainable investments, two in three Indonesians are keen to find out more about sustainable investing. According to the Study, while only 28 per cent currently have sustainable investments in their portfolio, nine in 10 are aware of at least one sustainable finance product.
Employees are largely satisfied with support at work
62 per cent of Indonesians say they feel calm at work – a significant increase (28 per cent) from the previous year. These positive sentiments may be a result of stronger mental health support from companies. 86 per cent of consumers report being satisfied with their employers’ mental health support, the highest percentage in the region.
Flexible work arrangements continue to be a crucial factor for employee satisfaction (55 per cent), in the realm of mental health support at work. In particular, 70 per cent of Gen Zs are seeking flexible working hours.
Overall, support in the workplace is important. Forty-three per cent of respondents expect their job to offer a supportive working environment – on par with receiving a decent salary, among other benefits. In terms of professional development, more support may be necessary as well. More than nine in 10 employees expect the need to upskill or reskill, in order to stay relevant for the job market in the next six to 12 months.
Partnering for growth
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The ACSS 2023 reports and infographics are now available for download:
- Consumer sentiments and financial habits
- Sustainable behaviour and sustainable finance
- Employee concerns and expectations
About this study
ASEAN Consumer Sentiment Study (ACSS) is UOB’s regional flagship study analysing consumer trends and sentiments in five countries: Singapore, Malaysia, Thailand, Indonesia and Vietnam. Now in its fourth year, the 2023 survey captures the responses of 3,400 consumers across different demographic groups in this dynamic region. In Indonesia, 600 consumers were surveyed.
Some of the areas covered include:
- Everyday life outlook
- Shifts in spending and financial habits
- Digital payment habits and preferences
- Sustainable behaviour and sustainable finance
- Digital payment habits and preferences
Important notice and disclaimers
This article shall not be copied or relied upon by any person for whatever purpose. This article is given on a general basis without obligation and is strictly for information only. The information contained in this article is based on certain assumptions, information and conditions available as at the date of the article and may be subject to change at any time without notice. You should consult your own professional advisers about the issues discussed in this article. Nothing in this article constitutes accounting, legal, regulatory, tax or other advice. This article is not intended as an offer, recommendation, solicitation, or advice to purchase or sell any investment product, securities or instruments. Although reasonable care has been taken to ensure the accuracy and objectivity of the information contained in this article, UOB and its employees make no representation or warranty, whether express or implied, as to its accuracy, completeness and objectivity and accept no responsibility or liability for any error, inaccuracy, omission or any consequence or any loss or damage howsoever suffered by any person arising from any reliance on the views expressed and the information in this article.
