Beyond the 5.6% Economic Growth: The Consumptive “Pinjol” Trap & How to Build Real Wealth

Recently, the Government of Indonesia announced strong 1st-quarter Gross Domestic Product (GDP) numbers (hovering around 5.6%) and future targets. Indonesian economy is targeted to grow within the range of 5.8% to 6.5% by 2027. This figure is undoubtedly a breath of fresh air for our capital markets and the broader economy.

But have you ever wondered about the components that make up these GDP numbers? In macroeconomics, GDP is calculated using a straightforward formula:

C + I + G + (X - M)

• C (Consumer Spending)

• I (Investments)

• G (Government Spending)

• X - M (Exports minus Imports)

Out of all these components, consumer spending is the primary engine of Indonesia’s economy. High consumption indicates that the economy is actively moving. However, a critical question arises:

Is the current consumption among the younger generation driven by a rise in real disposable income, or is it being supported by debt?

The Online Loan (Pinjol) Phenomenon: The Latent Danger of Lifestyle Debt

Source: Magnific/rawpixel

We are currently facing a potential societal situation where consumption is being funded by debt, as current data shows it is heavily fueled by pinjol (online loans). The reality is that recent high consumption figures are heavily propped up by unhealthy debt.

According to data from the Financial Services Authority (OJK), as of March 2026, the outstanding public debt on pinjol applications reached a staggering record of IDR 101.03 trillion. The same report explicitly states that Millennials and Gen Z are the largest contributors to these non-performing loans.

Even more concerning, the default rate (tingkat wanpestrasi 90 hari aka TWP90) for online loans among the younger generation has drastically jumped to 4.52%, compounded by lifestyle debt from Buy Now Pay Later (BNPL) services that has surpassed IDR 28.3 trillion.

We need to be objective: online loans are legitimate financial facilities that are regulated by the authorities. When used as working capital for productive businesses, they can help stimulate the economy. The disaster begins when this short-term, high-interest debt is used purely for lifestyle consumption—such as buying the latest gadgets, funding FOMO-driven (Fear of Missing Out) vacations, or simply hanging out at trendy cafes. Taking on high-interest debt amidst stagnant income growth is a guaranteed recipe for financial ruin.

The “Healthy Investing” Lifestyle: A Sustainable Approach

Consumption is indeed vital for the country’s economic growth, but individual consumption must be sustainable. To break free from the vicious cycle of “borrowing to pay off borrowings”, it is time for us to shift our mindset using the three core pillars we identify as part of the “Investasi Sehat” (Healthy Investing) lifestyle:

1. Save, Not Spend

Delay instant gratification. Forcing a luxurious lifestyle by relying on online loan debt will only drain our energy and destroy our future credit score. Redirect the money that usually goes toward consumptive loan installments into a safe, solid emergency fund or savings.

2. Security (Avoid Scams)

Always protect our hard-earned capital. Never be tempted by offers or financial opportunities that sound too good to be true. Best practices dictate dealing only with regulated financial intermediaries. If there are any questions or suspicions regarding a potential scam, please visit the IASC (Indonesia Anti-Scam Centre) website. Ensure we only entrust our money to logical, officially licensed platforms that are strictly regulated by authorities.

3. Invest (Make Your Money Work)

One way of managing our savings is to deploy it in the capital markets, either in equities, unit trusts, or fixed income. Create our own portfolio depending our risk levels to beat inflation over the medium to long term.

Therefore, to participate in that massive GDP growth potential and secure our financial future, it may be wise to hold some equity in the companies that are actively driving that growth.

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Disclaimer: This content is created for educational purposes or service promotion, and does not constitute a recommendation to buy or sell any specific Securities. Any risks arising from investment decisions made based on the information in this publication are the sole responsibility of the respective audience. PT KAF Sekuritas Indonesia is licensed and supervised by the Financial Services Authority (Otoritas Jasa Keuangan / OJK).