Nailul Huda, Director of Economics at the Center of Economics and Law Studies (Celios), believes 2025 could be a challenging year for Indonesians amidst significant economic pressures. One reason is the continued massive number of layoffs (PHK) in the past two months.

Data from the Ministry of Manpower recorded 18,610 layoffs between January and February 2025. This number more than doubled compared to the same period in 2024. In fact, according to KSPI data, 60,000 workers have been laid off from 50 companies.

The massive layoffs have weakened consumption performance, with one indicator being the Consumer Confidence Index (CCI).

"In January 2025, the Consumer Confidence Index (CCI) decreased by 0.4 percent (month-on-month) compared to the December 2024 CCI. This is quite an anomaly. Looking back at the 2022-2024 period, the CCI typically increases in January due to consumer optimism at the start of the year. Weakening consumer confidence also occurred in February 2025," Huda said in a statement received by inilah.com in Jakarta on Friday (March 28, 2025).

Other data also shows a similar trend, with a decline in the Real Sales Index (IPR) in January 2025. In December 2024, Huda said, the IPR was 222 points, and it fell to 211.5 in January 2025.

"If we look at the movement from December 2023 to January 2024, it is still moving positively. This means that consumers who are unsure about the economy in 2025 will also push our retail sales down. As a result, people's purchasing power will fall further at the beginning of 2025," he said.

Given these conditions, he said that money circulation during Ramadan and Eid would weaken compared to last year.

"The additional narrow money supply (M1) during Ramadan and Eid al-Fitr in 2025 will decrease by -16.5 percent compared to the same period in 2024. The additional money supply will only reach IDR 114.37 trillion. Meanwhile, in 2024, the additional money supply during Ramadan and Eid al-Fitr will reach IDR 136.97 trillion," Huda explained.

Meanwhile, CELIOS Executive Director Bhima Yudhistira stated that the decline in additional money circulation during Ramadan and Eid this year has impacted the formation of national GDP, which is not optimal.

"Based on CELIOS modeling, the additional GDP generated by Ramadan and Eid al-Fitr in 2024 will reach IDR 168.55 trillion. In 2025, it will only reach IDR 140.74 trillion, a 16.5 percent decrease. Meanwhile, business profits will only reach IDR 84.19 trillion, far below last year's additional revenue of IDR 100.83 trillion," Bhima explained.

Another indicator reflecting weakening purchasing power is the decline in the share of personal savings, which reached only 46.4 percent of total Third Party Funds (TPF). According to Celios, this was unprecedented during the early years of the previous administration.

At the start of the Jokowi-JK administration, personal savings accounted for 58.5 percent, while Jokowi-Amin's accounted for 57.4 percent. The decline in personal savings indicates that people are tending to survive by dipping into their savings, as real wages are too low, benefits are reduced, and the threat of layoffs persists.

"Given these various economic indicators, Celios estimates that economic growth in the first quarter of 2025 will only be 5.03 percent year-on-year. This figure is lower than the 5.11 percent growth in the first quarter of 2024," said Bhima.

The growth forecast takes into account the impact of Ramadan and Eid al-Fitr in 2025, which cyclically boost household consumption compared to the fourth quarter of 2024.

However, seasonal factors, coupled with the distribution of THR, have not been able to boost economic growth. In fact, there are concerns that the economy will slow down after Eid al-Fitr, as there is no longer a significant driver of consumption.

The government's massive spending cuts are also impacting consumer confidence. The weakening rupiah has also increased public caution in spending their money.

Source: Inilah.com

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