Indonesia’s market turmoil is adding to the economic worries sapping sentiment among consumers, businesses and retail investors ahead of one of the Southeast Asian country’s biggest holidays.

Benedicta Alvinta, a freelance marketing strategist in the central Java town of Yogyakarta, says the “nerve-racking” slide in Indonesian stocks hurt her investment portfolio largely focused on shares, followed by government retail bonds, mutual funds and gold.

“I still believe that the stock index will recover, but in the long run, just like many people, I’m less confident about the economic outlook so I’m more careful in investing,” she said. The 29-year-old is holding back on some spending, including postponing plans to renovate her home and replace furniture.

Tens of millions fewer Indonesians are expected to travel this year for the Eid al-Fitr holiday season across Java, Sumatra, Borneo and other islands of the archipelago against a backdrop of waning confidence. Budget cuts, populist spending plans and policy uncertainty under President Prabowo Subianto have added to the concerns.

The Jakarta Composite Index, which recently posted its biggest intraday decline in more than a decade, is among the world’s worst performers this year, while on March 25 the rupiah slid to the weakest level since the Asian financial crisis of the late 1990s. 

Now, local markets are getting a break, shutting down for more than a week to mark the end of the Muslim fasting month of Ramadan.

At a time when pocketbooks are lighter and economic news is grim, the roads are less congested than normal: the transport ministry estimates about 146 million people will travel this year, down more than 45 million from last year. Factors weighing on households in recent months run the gamut from layoffs in the country’s massive textile industry to weak nickel prices and the slide in the rupiah.

Shinta Widjaja Kamdani, chairwoman of the Indonesian Employers’ Association, pointed to rising costs of raw materials last month in the wake of rupiah depreciation.

“Higher input costs will erode margins and may push up selling prices,” she said in a statement. That “can lead to a decline in people’s purchasing power and a weakening of overall economic growth.”

Disfiyant Glienmourinsie, who runs food-catering business Dapur Makaro in South Jakarta, said the price of salmon for one of her most popular dishes has risen around 15% this month alone.

“Two weeks ago when I went to buy, they apologized to me and said salmon prices were rising,” she said Thursday. She paid the supplier, then switched to lower-quality packing to keep her catering prices the same.

“I can still manage although my profit margin is no longer at 100%,” she said. “I don’t want to compromise the quality or the portion of the food.”

It’s not all gloom. The stock market this week offered some cheer for Indonesia’s more than 15 million retail investors as major banks unveiled higher dividend payouts. Shareholder meetings drew crowds of hundreds, some of whom posted livestreams on TikTok.

On Tuesday, a line snaked the length of a block from PT Bank Mandiri’s head office in downtown Jakarta, with some shareholders arriving five hours ahead of the meeting to secure seats inside. The lender announced its highest-ever payout ratio.

Consumer confidence is another matter. Consumer goods imports shrank 20% in the first two months of the year, while Bank Indonesia estimates that retail sales fell in February, which would mark the first contraction since last April. That’s despite the government announcing a minimum wage hike and all but scrapping a rise in sales taxes. 

“Various government stimulus measures have helped support purchasing power, but it does not appear to be significant enough,” said Solihin, chairman of the Indonesian Retail Merchants Association. He said consumers are increasingly switching to cheaper products, including in fast-moving consumer goods, reflecting a decline in purchasing power.

Glienmourinsie, the caterer, said her customers seem to have less to spend this year.

“It is a festive season right now with the Eid al-Fitr holiday, but I can really see the difference compared with previous years,” she said. “Demand is down at least 25% from last year.”

With assistance from Tassia Sipahutar and Eko Listiyorini.

This article was generated from an automated news agency feed without modifications to text.