Increased salary for civil servants increases household consumption

ECONOMIC GROWTH - JAKARTA. The increase in salary of Civil Servants (PNS) by 5% starting in April 2019 is expected to support household purchasing power. Thus, public consumption will increase Indonesia's economic growth this year, especially in the second quarter.

Iskandar Simorangkir, Deputy of Macroeconomic Economy at the Coordinating Ministry for Economic Affairs, said the increase in salary for civil servants could increase household consumption. "Household consumption will increase in line with increases in civil servants' wages," he said on Monday (3/18).

Until last January, Bank Indonesia (BI) noted that the purchasing power of domestic people was still quite good. The Real Sales Index (IPR) grows 7.2% on an annual basis.

BI also projects retail sales in February 2019 will increase. The February IPR is estimated to grow 10.9%, supported by sales of clothing commodity subgroups and cultural and recreational goods trade groups.

Previously, Iskandar said that the increase in public consumption would continue to increase in the second quarter. Legislative elections and presidential elections are part of the trigger.

Iskandar estimates that economic growth in the second quarter of 2019 will above 5%. "I estimate that the second quarter economic growth will be in the range of 5.0% - 5.2%," he concluded.