Retail sector economy prime mover
Retail sector economy prime mover
Dadan Wijaksana, The Jakarta Post, Jakarta
Despite the current strained economic conditions, the retail
sector is expected to show resilience and keep growing on the
back of strong consumer spending, thus keeping the country's
economic wheels moving.
Economists said that the retail sector would be the prime
mover of the country's economic growth, pushing other sectors to
grow as well.
Citibank economist Anton Gunawan stated a growing retail
sector came as no surprise, in line with strong consumer
spending, which was the foundation of the country's economic
growth last year.
"The retail sector grows due to strong consumption on food-
related products, textiles and durable goods, such as electronics
and cars," he said over the weekend.
Standard Chartered Bank economist Fauzi Ichsan, also shared
the same view: "During the crisis, it has been proven that the
retail sector has managed to keep growing, even under these
unfavorable conditions."
Both agreed on the importance of a growing retail sector and
its contribution to overall growth, as it could generate other
sectors to move.
Strong consumer spending allows people to spend money in
retailers to fulfill their needs.
When this happens, industries related to food or clothing or
electronics, will eventually grow as well, giving a boost to the
whole economic activity.
The International Monetary Funds (IMF) stressed last week the
importance of the retail sector by calling on the country's
banking sector to give a larger portion of lending to retailers.
With a significant drop in exports and investment flow, the
country's economy has been relying heavily on strong domestic
consumption to prop up its growth.
Last year, Indonesia managed to defy a declining trend of
economic growth in the region by posting an impressive 3.5
percent growth, thanks to high consumption expenditure.
The trend is expected to continue this year, with consumer
spending surpassing exports and domestic investment, both which
have been declining.
Assuming consumption remains robust, the government has
targeted the economy to grow by 4 percent this year.
Exports, which used to be the key mover of economic growth,
have been badly hit by the global downturn and would remain so
until after the first half of the year when the world's major
economies like the U.S. and Japan are expected to bounce back.
As for the domestic investment sector, analysts believe it
will still be difficult to come by because of the prolonged
economic and political uncertainty.
Aside from the retail sector however, the construction and
agriculture sector would also play an important part in moving
the wheels of the economy.
According to Anton, the construction sector grew significantly
last year, especially in housing projects for medium and lower
income groups, and would continue to grow this year.
"This sector is also growing, this is good, because it will
generate a demand for supporting goods, such as cement, steel and
so on," he said.
Meanwhile, Fauzi underscored that the agriculture sector was
one of the driving forces of the economy as it remains the
dominant sector in terms of absorbing manpower.
"Despite being a traditional sector, some 40 percent to 50
percent of workers in the country are involved in this sector,"
Fauzi said.