Growth slipped to 5.3 per cent once the holiday spending wore off

Indonesia's economy grew 5.3 per cent in the second quarter compared with the same three months a year earlier, according to official figures released this week. As Nikkei Asia reports, the slowdown came mostly from households. People spent less freely, and part of the reason is simply the calendar: this quarter had no big Islamic holiday to spend on.

That comparison is the whole story. Nikkei put first-quarter growth at 5.61 per cent, the fastest in almost three years, but it leaned on Eid al-Fitr in late March, when millions of people travel home and shop. Economists warned at the time that the lift was a one-off and would not repeat. The second quarter is what the economy looks like without it.

Prices did the rest. Fuel got more expensive as the effects of the Iran war reached Indonesian pumps, and fuel is the cost that spreads: it moves into transport fares, delivery charges and the price of food at the market. When more of a household's money goes on getting to work and eating, less is left for everything else, and household spending is the largest single piece of Indonesia's economy. Economists told Nikkei the government's upbeat full-year forecast now needs "a significant game changer" to be met.

Why it matters

By regional standards 5.3 per cent still sounds healthy, but the part that is easing is the part you live in: what families can actually afford to buy. If you run a warung, a shop, or anything that depends on people spending, plan for a quieter second half rather than the government's forecast. Watch fuel prices in particular, since they are the fastest route from a war thousands of kilometres away to the price of rice in your neighbourhood.