Why is the Indonesian household sector so resilient?

Private consumption will only ease slightly to 4.5% in 1Q12 as consumer loans and retail sales remain fairly brisk.

This will lead to a 2.8% percentage points contribution to overall GDP, according to Moody's Analytics in a new commentary, part of which was supported by stimulus measures aimed at keeping household spending afloat.

Here's more from Moody's:

Steady consumer lending and retail sales data suggest Indonesian private consumption is growing at a decent clip. Consumer loans, which make up 30% of total lending, grew 21% y/y in the first two months of 2012, a still-solid rate, though a little slower than in the final months of 2011. Nevertheless, we believe the 100 basis points' worth of rate cuts since October and other monetary stimulus measures supported household spending in the first quarter.

Strong growth in retail volumes reinforces our point, after sales grew 11.3% y/y in February following a 15.1% increase in January. Upbeat demand for consumer durables is driving retail sales, signaling that households still harbor a positive outlook. Meanwhile, consumer imports grew 17% y/y in the first two months of 2012, returning to a more sustainable growth pace following the surge through 2010 and 2011.

So what does this mean for our first quarter private consumption and overall GDP forecast? The slight easing in imports, retail sales and lending indicators suggests private consumption pulled back toward 4.5% to 5% y/y in the first quarter of 2012, from 5.4% in the last stanza of 2011. As private consumption accounts for 56% of GDP, we expect this contributed 2.8 percentage points to first quarter growth.