Savings Decline Not Just About Weak Purchasing Power, Bank Mandiri Economists Say
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JAKARTA, Investortrust.id — Chief Economist Bank Mandiri Andry Asmoro says the sharp decline in household savings in recent years is not only the result of weaker purchasing power but also reflects a growing shift into alternative investment instruments.
He explained that the average household savings has fallen from around Rp 4 million, equal to $250, in 2013 to about Rp 1.74 million, equal to $109, today. According to Andry, two key drivers explain this trend.
“The first is reduced income, for example due to job changes or unemployment. Especially at the lowest tier of deposits under Rp 100 million, people are experiencing a smaller wallet size as their income or business activity slows,” Andry said during the Mandiri Economic Outlook Q3 2025, held virtually on Thursday, Aug. 28, 2025.
At the same time, he noted, many households are reallocating funds from savings into gold, property, and other investments. With gold prices rising more than 25% this year, the metal has become increasingly attractive.
“Because more funds are going into other instruments, deposits in the banking system, particularly for accounts below Rp 100 million, have also declined,” he added.
Head of Mandiri Institute Andre Simangunsong confirmed that savings deposits recorded by the Indonesia Deposit Insurance Corporation (LPS) continued to decline through June 2025. However, July saw a slight rebound after the government disbursed wage subsidy assistance.
“In July, savings started to rise again as the government rolled out wage subsidies. As of late July, over 95% of the 15 million targeted workers, or about 13 to 14 million people, had already received the subsidy,” Andre said.
He emphasized that the drop in average savings should not be interpreted purely as weaker purchasing power. A Mandiri Institute survey showed rising financial literacy, especially among younger generations, in choosing investment vehicles.
“The ownership of instruments other than savings, such as gold, stocks, mutual funds, and bonds, is increasingly high among younger groups. For example, about 38% of Gen Z reported owning gold as an investment, while among Gen X and older the figure was around 61%. The same trend is visible in mutual funds,” Andre explained.
He concluded that the decline in average savings or the savings index does not necessarily signal a loss of consumer strength, but rather a broadening of household investment strategies.
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