Indonesia ‘s economy posted solid growth last year, but that hasn’t translated into stronger household savings. OK Bank Indonesia, a subsidiary of South Korea’s OK Financial Group, reported a 12% decline in deposits during the third quarter of 2024, compared to the same period a year earlier.
The bank cited a shift in consumer behavior, saying many are prioritizing basic necessities over discretionary spending. “People are spending less on things like entertainment and dining out,” the bank said. “Instead, they’re focusing more on groceries and household essentials.”
The broader economy grew 5.02% year-over-year in the fourth quarter, with mining, manufacturing, telecom, retail, real estate, and education sectors driving the gains. While the growth fell just short of the government’s 5.2% target, it still signaled a healthy expansion.
Still, the outlook is clouded by rising fiscal and currency concerns under President Prabowo Subianto, a former general who took office earlier this year. His administration launched a nationwide free school lunch program in January and began offering free health screenings in February-policies that have raised questions about long-term budget sustainability.
The Indonesian rupiah has tumbled to its lowest level against the U.S. dollar since the 1998 Asian financial crisis. Meanwhile, the Jakarta stock index is down more than 10% in 2025.
Public unrest is adding to the pressure. Protests have escalated over a proposed law that would allow active military officers to hold civilian jobs. One demonstration turned violent, resulting in a Hana Bank branch in Bandung being set on fire.
