The slowdown was primarily driven by weak household consumption, which accounts for half of GDP, growing only 4.91 percent due to sluggish clothing and footwear sales. Manufacturing production increased by 4.72 percent, while major apparel companies like Sri Rejeki Isman and Pan Brothers have been forced to close factories and reduce workforce, contributing to a decline of 60,000 jobs in October.
Investment grew 5.15 percent, marking its fastest expansion in a year, while exports increased by 9.09 percent. However, economist Ahmad Mikail of Sucor Securities warned that "purchasing power is weakening, with household consumption growth staying below 5 percent for four consecutive quarters," predicting this trend could continue through year-end without significant stimulus from the government or central bank.
"While the previous government benefited from rising commodity prices, the Indonesian economy needs to reorient its industrial policy toward developing the service sector to achieve growth above 5 percent," said Helmi Arman, a Citi economist, as newly inaugurated President Prabowo Subianto aims to boost growth to 8 percent through measures including free meals for 80 million children and pregnant women.