COVID-19 and the measures being taken to contain its spread are having a significant impact on Indonesia’s economy, with GDP set to contract by 1.5% in 2020 after growth of 5% in 2019.
Due to the emergence of COVID-19 in China, Indonesia banned all flights from and to mainland China starting from 5 February. From 8 March, travel restrictions were expanded to include affected parts of South Korea, Italy and Iran, and from then included further European countries.
Many banks are revising their consumer credit/lending criteria due to the impact of COVID-19, coupled with a sharp decline in the strength of the Indonesian rupiah. While the government has offered subsidies to the banks to encourage them to provide personal loans, concerns over the rise in non-performing loans has limited the impact of these measures.
There are more alternative non-banking lending companies emerging in Ind0onesia that focus on consumer loans. These are mostly online fintech companies such as Kredivo.
After strong gains over the review period, mortgages/housing looks set to stagnate in 2020. With Indonesia’s middle-class expanding during the review period thanks to strong economic growth, the demand for housing grew, with consumers either keen to purchase their first home, or to move to a bigger or better one.
Indonesia’s economy places a heavy reliance on consumer spending for its GDP and therefore it is important that consumers start spending again if consumer lending is to recover. Both lenders and borrowers are expected to remain cautious, especially in the short term, with widespread wage and job insecurity.
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Understand the latest market trends and future growth opportunities for the Consumer Lending industry in Indonesia with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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This report originates from Passport, our Consumer Lending research and analysis database.
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