Economics

Indonesia’s Shrinking Household Savings

Article
April 24, 2025

Over the past 12 years, Indonesia’s household savings have steadily declined, with average deposit values falling significantly. Although total third-party funds (DPK) in the banking sector continue to grow—driven by corporate and government deposits—household DPK has shown weaker performance. Please read our latest take on this issue to understand the underlying patterns and data.


Indonesia’s Shrinking Household Savings 

Signals and Trends from Macro-Economic Data

Recently, growing concerns over the declining purchasing power of the middle class have become a widely discussed issue. According to Bank Indonesia’s research, money circulation during Ramadan and Idul fitri decreased by Rp22.6 trillion compared to the previous year. Supporting this, the Mandiri Spending Index (MSI) also recorded a noticeable slowdown in consumer spending as early as one week before Ramadan.

This weakening in seasonal spending is mirrored on household saving pattern. Over the past 12 years, Indonesia’s household savings have steadily declined, with average deposit values falling significantly. Although total third-party funds (DPK) in the banking sector continue to grow—driven by corporate and government deposits—household DPK has shown weaker performance. This trend is partly driven by digital banking penetration, which has fragmented savings across multiple accounts, but it may also signal growing concerns over the decline of Indonesia’s middle class.

 

Author:
Jagten Raj Singh
Senior Policy Researcher
jagten@mandalaconsulting.id


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