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Purchasing Power Declines, Entrepreneurs Say People Have No Money Right Now

Arsjad Rasjid, Chairman of the Advisory Board of the Indonesian Chamber of Commerce and Industry (KADIN), revealed that Indonesians' purchasing power continues to decline. He believes that people can now practically run out of money to shop, even though economic growth figures still appear positive. 

"The current focus that must be taken seriously is not only economic growth, which is only 4.7 percent, but also the people's continuously declining purchasing power. People can practically say they don't have money right now. That's why purchasing power is declining," Arsjad said in his presentation at the forum titled "Driving Inclusive Growth: Innovation, Industrialization, and Energy Transition for Job Creation" at Paramadina University, published on Sunday (July 20, 2025). 

He said that various global geopolitical changes have impacted the Indonesian economy, from the conflict in the Middle East, the effects of Donald Trump's policies, to the Russia-Ukraine war. Moreover, China's usually stable economy is now slowing, putting even more pressure on the global and domestic economies. 

However, for Arsjad, Indonesia's biggest problem lies domestically. In addition to weakening purchasing power, the employment sector is also considered fragile. Although the open unemployment rate has decreased, the number of unemployed remains high at 7.28 million people. 

"What is even more concerning is the fact that almost 60% of our workforce is still in the informal sector," he stressed. According to him, this indicates the weakness of formal job creation in Indonesia. 

He also reminded that Indonesia's economic structure is heavily dependent on two groups: traders who survive off their business profits, and workers who rely on wages, bonuses, and other income. 

"If these two sources no longer exist, there will be no economic growth; it will definitely decline sharply," he said. 

Arsjad also urged all parties to pay serious attention to the issue of people's purchasing power. According to him, if this situation is allowed to continue, the Indonesian economy is at risk of not only stagnating but also experiencing a deeper slowdown. 

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Tag: Arsjad Rasjid KADIN