Indonesia Retailer Revenue as Signal to Consumption Pick Up

Indonesian Gross Domestic Product (GDP) growth in Q1 2018, did not came as expected. A 5,06% growth in first quarter was away from government 5,4% full year 2018 target growth. Consumption growth, the biggest component in GDP, was slightly lower if compare with Q4 2017 (4.95% vs 4,97%) but just 0,01% above Q1 2017 growth.

Though the consumption data has not been picked up with jsatisfactory result, the revenue growth of consumer retail sector in Indonesia Stock Exchange has 14,65% growth. High-end retailer (ACES -Ace Hardware and MAPI -Mitra Adi Perkasa) and gadget retailer (ERAA -Erajaya) have significant revenue growth in Q1 2018 if compare from last year in same period. The retailer revenue growth could be seen as increase in consumer’ purchase amount in respective retailer. Different with consumer sector revenue growth, which only increase 1,3% in Q1 2018 compare same period last year. Lower revenue growth. The consumer sector represent consumer daily needs, which the demand will highly dependent to seasonality, population growth, or new product development.

The consumption growth in GDP represent aggregate expenditure of house hold and private sector. Though the retailer and consumer good sector only serve a small part of Indonesian people, the growth of retailer revenue could be seen as one of improvement on spending appetite. If the retailer revenue growth keep increasing in coming financial report and companies revenue in consumer sector has picked up, the consumption in GDP figure may show an improvement.