Mirae Asset Sekuritas Indonesia Sector Update Consumers
7:33 PM
Mirae Asset Sekuritas Indonesia Sector Update Consumers
- Indonesia’s Gini ratio declines by Dang Maulida (dangmaulida@miraeasset.co.id)
Gini ratio fell again in September 2016
Gini ratio is a statistical measure used to analyze the income distribution of a nation’s residents. A value of 0 represents perfect equality, while a value of 1 represents absolute inequality. Earlier this month, Indonesia’s official statistics bureau (Badan Pusat Statistik; BPS) announced that the country’s Gini ratio was measured at 0.394 in September 2016, down YoY from 0.402. The ratio had hovered above the 0.40 level after spiking to 0.410 in March 2012 (from 0.388 in September 2011). Notably, the 0.414 result recorded in September 2014 marks the all-time high (see Figure 1).
In line with shifting consumption patterns
The Gini ratio result was in line with broader income-based consumption trends. In September 2016, total expenditure per capita among Indonesia’s poorest 40% grew by 4.56% YoY, outpacing the rate of increase (+3.83 YoY) for the top-20% band. Meanwhile, expenditure per capita among middle-income consumers (middle 40%) showed the strongest growth, jumping 11.7% YoY (see Figure 2). Indeed, both the Gini ratio result and the aforementioned expenditure growth metrics signal a shift toward less disparity.
Higher education attainment levels play a part
In our view, increasing school enrollment is a key structural factor contributing to the decline in Gini ratio. Indonesia’s school participation rate has improved since 2011 across all age groups (see Figure 3). For example, in 2015, 94.7% of children aged 13-15 attended school, up from 88% in 2011. Also, the rate for 19-24 year olds improved to 23% in 2015 against 14.8% in 2011. Overall, these shifts have given rise to a better-educated workforce (see Figure 4). In 2010, the percentage of the workforce that had not advanced beyond primary school stood at 22.3%; by February 2016, the figure had fallen to 16.54%. We believe that increased access to education throughout Indonesia will lead to higher productivity and higher wages.
Growth is centered in Java
In 2007, Java accounted for the largest share (58.2%) of the Indonesian economy, followed by Sumatra (23.2%), Kalimantan (9.8%), Sulawesi (4.3%), and other areas (4.5%). Almost a decade later, despite steady economic growth, there has been no meaningful change to this regional breakdown. Indeed, last year, Java contributed 58.49% to the national economy, followed by Sumatra (22.03%), Kalimantan (7.85%), Sulawesi (6.04%), and other areas (5.59%). Against this backdrop, we do not believe that a sharp decline in Gini ratio will materialize in the short to medium term. However, it should be noted that Indonesia appears to display less income inequality than other major emerging countries (see Figure 5).
(Ilustrasi selengkapnya dapat dibaca disini).
Gini ratio is a statistical measure used to analyze the income distribution of a nation’s residents. A value of 0 represents perfect equality, while a value of 1 represents absolute inequality. Earlier this month, Indonesia’s official statistics bureau (Badan Pusat Statistik; BPS) announced that the country’s Gini ratio was measured at 0.394 in September 2016, down YoY from 0.402. The ratio had hovered above the 0.40 level after spiking to 0.410 in March 2012 (from 0.388 in September 2011). Notably, the 0.414 result recorded in September 2014 marks the all-time high (see Figure 1).
In line with shifting consumption patterns
The Gini ratio result was in line with broader income-based consumption trends. In September 2016, total expenditure per capita among Indonesia’s poorest 40% grew by 4.56% YoY, outpacing the rate of increase (+3.83 YoY) for the top-20% band. Meanwhile, expenditure per capita among middle-income consumers (middle 40%) showed the strongest growth, jumping 11.7% YoY (see Figure 2). Indeed, both the Gini ratio result and the aforementioned expenditure growth metrics signal a shift toward less disparity.
Higher education attainment levels play a part
In our view, increasing school enrollment is a key structural factor contributing to the decline in Gini ratio. Indonesia’s school participation rate has improved since 2011 across all age groups (see Figure 3). For example, in 2015, 94.7% of children aged 13-15 attended school, up from 88% in 2011. Also, the rate for 19-24 year olds improved to 23% in 2015 against 14.8% in 2011. Overall, these shifts have given rise to a better-educated workforce (see Figure 4). In 2010, the percentage of the workforce that had not advanced beyond primary school stood at 22.3%; by February 2016, the figure had fallen to 16.54%. We believe that increased access to education throughout Indonesia will lead to higher productivity and higher wages.
Growth is centered in Java
In 2007, Java accounted for the largest share (58.2%) of the Indonesian economy, followed by Sumatra (23.2%), Kalimantan (9.8%), Sulawesi (4.3%), and other areas (4.5%). Almost a decade later, despite steady economic growth, there has been no meaningful change to this regional breakdown. Indeed, last year, Java contributed 58.49% to the national economy, followed by Sumatra (22.03%), Kalimantan (7.85%), Sulawesi (6.04%), and other areas (5.59%). Against this backdrop, we do not believe that a sharp decline in Gini ratio will materialize in the short to medium term. However, it should be noted that Indonesia appears to display less income inequality than other major emerging countries (see Figure 5).
(Ilustrasi selengkapnya dapat dibaca disini).
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