Urip Hudiono, Jakarta – Malls are bustling with shoppers, roads and popular resorts are jam-packed and many hotels are fully-booked.
The weeklong Idul Fitri holiday is spurring retail sales and economic activity in the tourist sector – all of which is positive for Indonesia's consumer-driven economy, but to what extent remains questionable.
The country's overall economy may only gain a "one-shot effect" from the rise in consumer spending, economists are saying. Countering this is the risk of rising inflation, as well as a possible slowdown in the activities of manufacturing and export-related businesses.
"Consumption is sure to increase during the holidays, tourism and transportation too, but just for the moment. Inflation will pick up as well on the higher demand, although perhaps milder in trend than in previous years," economist Faisal Basri from the University of Indonesia said.
"Overall, such a trend of a sudden rise in some sectors of the economy, followed by a quick falling back afterward and a slight downturn in production and distribution activities, will not translate well for the economy."
Faisal, who also heads the Indonesian Chamber of Commerce and Industry's economic team, said all this showed a lack of understanding in how to better manage the country's economic potential and capacity during such holidays.
He also criticized the government's decision to extend the official holiday on short notice, disregarding the business community's common cycle and affecting their activities.
The government originally announced the Idul Fitri holiday would run from Oct. 12 to 17, before extending it to the 19th. Idul Fitri, which marks the end of the Ramadhan fasting month, fell on Oct. 13 and 14 this year.
"In other countries, holidays are scheduled at least a year – not a month – in advance so businesses can plan ahead for the long term. We have to realize that our industries are now part of the world's global production network, which requires timely delivery," Faisal said.
"Those who want to work should be allowed to work, with related public services such as customs and port services continuing to operate as normal."
Economist Aviliani of the Institute of Development and Finance said Idul Fitri and the upcoming Christmas and New Year's holidays would only create a "seasonal" benefit for the economy from a rise in consumer spending, with inflation likely to remain stable.
"The manufacturing and export sectors won't be much affected, as they have probably already increased their production to anticipate the holidays," she said.
Aviliani also warned that a rise in consumer spending while the public's purchasing power had not yet fully recovered could lead to "risky consumption trends", such as reckless debt and credit card usage, which could harm the economy in the future.