Economist: Trend of borrowing and drawing down savings on the rise

The trend of people borrowing and drawing down savings has risen in recent times. Teuku Riefky, a macroeconomist and market researcher at LPEM FEB Universitas Indonesia (UI), said the phenomenon indicates that purchasing power and household resilience are weakening. Riefky outlined the situation during the discussion ‘5.61 per cent growth, but fragile’ hosted by the Indonesian Economists Alliance at Paramadina University, Jakarta, on Saturday, 23 May 2026. ‘From household spending patterns. Some is consumed, some saved, some borrowed. It turns out recently, the trend to borrow and to spend down savings has been increasing,’ Riefky said. Between 2009 and 2016, Indonesia’s gross domestic product (GDP) grew by 5.6 per cent. In the same period, real wages or purchasing power based on salaries grew by 6.3 per cent. ‘Back then, we grew around 5 per cent per year; our real wages grew by 6 per cent. That means economic growth was enjoyed by the majority of Indonesians,’ said Riefky. However, the trend changed in the 2017-2025 period. Economic growth hovered around 5 per cent, but was not widely felt by the public. Because when GDP grows by 5 per cent, purchasing power grows by only 2 per cent. ‘This probably explains why we are growing but people feel their lives are not more prosperous,’ explained Riefky. He added that the condition of the middle class needs close attention because this group is one of the drivers of economic growth. Riefky said the increase in consumption by the poor is not yet strong enough to drive growth. ‘Only middle-class and upper-class spending drives economic growth,’ he said.