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Indonesian middle-class households grow richer: survey

07-23-2012 12:54 BJT

JAKARTA, July 23 (Xinhua)-- The results of a survey carried out by Indonesian central bank, Bank Indonesia (BI), showed that Indonesia's booming economy had turned middle-class households richer, with increases in net worth, assets, income and ability to repay loans, local media reported Monday.

The 2011 survey found that the middle class comprises 60.9 percent of Indonesians, while the low income segment with a net income of below 20.4 million rupiah (about 2,162 US dollars) per year was 22.1 percent of the population and the remaining 17 percent were those who have high income of more than 65.6 million rupiah. "Households'growth is driven by improving overall economic growth and manageable inflation. High gross domestic product creates economic potential for the people," said Yunita Resmi Sari, deputy director of BI's banking research and regulation department. "Improving household conditions also triggered consumption and therefore spurred economic activities,"she added.

Southeast Asia's largest economy is more than 50 percent driven by domestic consumption, and therefore stable prices are key to maintaining the over 6 percent economic growth seen since two years ago. Last year, inflation turned lower at 3.8 percent, compared with almost 7 percent in 2010.

Weaker inflation has lowered operational costs for households by 2.5 percent throughout last year, according to the BI survey. With lower costs and 14.7 percent higher gross income, Indonesian households saw their net income soaring by 80.8 percent last year to an average of 11.8 million rupiah, the Jakarta Post reported.

Household disposable income also rose 12.9 percent to an average of 37.7 million rupiah throughout 2011. "The increase in household income in 2011 was primarily driven by a 46 percent increase in production activities. Meanwhile, investment activities gained in 2011 compared with losses in 2010," Yunita said recently, adding that household investment returned 36. 3 percent last year to 527,971 rupiah.

Other than production activities, which account for 15 percent of overall household income, the increase in income was primarily supported by the service sector, contributing 58.5 percent. Income from trading activities accounts for 20.8 percent of overall Indonesian households income.

The improving condition of Indonesian household finances has brought up overall assets and net worth by 14 percent to an average of about 200 million rupiah each in 2011. Cash positions also soared 80.2 percent to 16 million rupiah, boosting household savings. "Higher savings has also strengthened the financing source for development," Yunita said.

The ratio of total household debt to total assets was only at 3. 3 percent last year, down from 3.6 percent in 2010, indicating that almost all of household assets were funded not by debt, but by people's own incomes, according to the survey.


Editor:James |Source: Xinhua

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