Indonesian consumers show strong financial literacy despite rising economic concerns

Jakarta, 9 December 2024 – Indonesian consumers displayed a strong sense of financial literacy as they stayed active in the key pillars of saving, investing, planning for retirement and protecting themselves via insurance even amid growing economic pessimism, UOB’s latest flagship ASEAN Consumer Sentiment Study (ACSS) 2024 found.

The study, conducted in partnership with global management consulting firm Boston Consulting Group, explored consumer trends and sentiments across five ASEAN countries, namely Indonesia, Singapore, Malaysia, Thailand, and Vietnam. Conducted in May and June 2024, the online study surveyed 1,000 Indonesian consumers across various demographic groups to better understand their financial literacy, priorities, and planning behaviours.

Mrs Cristina Teh Tan, Consumer Banking Director, UOB Indonesia, said, “UOB Indonesia believes that understanding our customers is at the heart of everything we do. The UOB ACSS 2024 reflects our commitment to uncovering the insights that matter most to Indonesians. The finding reinforces the growing financial maturity of Indonesian consumers, even in the face of economic challenges. UOB Indonesia remains committed to empowering individuals with the tools and resources to achieve their financial goals, from savings and insurance to retirement planning. These insights enable us to better support Indonesians in building a more secure financial future.”

Rising economic concerns result in weaker financial confidence for Indonesians
The ACSS 2024 found that Indonesian consumers were feeling increasingly negative about today’s economic environment compared to a year ago. The study showed that more consumers felt uncertain (26 per cent, up by three per cent from 2023), worried (25 per cent, up by nine per cent from 2023) and anxious (18 per cent, up by seven per cent from 2023) about the current state of Indonesia’s economy. Recessionary fears increased in tandem, with almost three in four Indonesian consumers saying that they believed a recession was likely in the next six to 12 months, up three percentage points from last year and higher than the regional average of 71 per cent.

Rising inflation and household expenses drove the pessimism, remaining the top financial concerns for Indonesians. In response, 62 per cent of respondents started a secondary source of income, 58 per cent delayed major expenses, and 54 per cent cut non-essential spending.

Financial pressures were also taking a toll on consumers’ ability to save and invest. Nearly half of respondents said their ability to save had been impacted, with Gen Z1 feeling this pressure the most (54 per cent). Similarly, 40 per cent of respondents reported challenges in setting aside money for investments, with the mass affluent demographic being the most affected (43 per cent). Moreover, 35 per cent of consumers reported difficulties in affording essential items for their families and themselves, with 40 per cent of mass consumers declaring as such.

Indonesian consumers priorities saving and prudent financial planning
UOB Indonesia recognises the resilience of Indonesian consumers in maintaining sound financial practices. More than half of Baby Boomers allocated above 20 per cent of their monthly income to savings, while 41 per cent of Gen Ys did so too. Forty-four per cent of respondents had set aside emergency funds sufficient to cover at least three months of expenses, showcasing a focus on financial preparedness.

Insurance coverage was another area where Indonesian consumers showed strong awareness. The ACSS 2024 findings showed that 77 per cent of respondents had health insurance, while 45 per cent held life insurance policies, reflecting growing recognition of the importance of protecting against unforeseen circumstances.

On investing, a significant proportion of Indonesians were actively building their wealth. A quarter of respondents invested more than 20 per cent of their annual income, with another 25 per cent allocating 11 to 20 per cent of their income to investments.

Retirement planning was also a key focus, with seven in 10 respondents indicating that they had a fairly or very clear understanding of the amount needed for a comfortable retirement. 89 per cent had already started their retirement planning, primarily through savings accounts (44 per cent), fixed deposits (19 per cent), and property investments (11 per cent). These findings underscore a proactive approach towards securing financial stability for the future.

UOB Indonesia continues to innovate and refine its offerings based on the insights gained from studies like this one. On 2 December, UOB Indonesia launched its first ever “Savings Weeks” programme, aimed at encouraging customers to take proactive steps towards building their savings habits and securing their financial futures. UOB Savings Week is part of UOB Indonesia's commitment to empower customers to achieve their financial aspirations. The bank remains dedicated to providing tailored solutions that address the financial needs of Indonesians, ensuring they are well-equipped to face challenges and capitalise on opportunities in an ever-changing economic environment.

The full UOB ACSS report is available on UOB Indonesia’s website at go.uob.com/acss2024-id