Indonesians are far more confident about their personal finances than other Asian consumers, a survey by credit card company Visa has revealed.
However, people are still spending cautiously and planning to save more because of the rising cost of living.
Economists have forecast that strong domestic demand and consumer spending will be the main drivers of economic growth this year, targeted by the government to reach 5.5 percent.
Based on interviews with 5,520 respondents across the Asia-Pacific region, the survey found that 68 percent of Indonesians were more confident about their financial position than six months ago.
Elsewhere in Asia, only 27 percent of respondents said they were more confident than six months ago.
Seventy-three percent of Indonesian respondents said they were concerned about the rising cost of living, and 65 percent said they planned to save more this year.
“There was a lot of economic uncertainty last year so it is encouraging to see that Indonesians are positive about their personal financial outlook when compared to six months ago,” Ellyana Fuad, Visa’s country manager for Indonesia, said in a statement on Tuesday. “Across the region, consumers are looking at their expenses, their savings and their job security to see how they can manage these rather than focusing on macroeconomic conditions such as exchange rates, interest rates or investment portfolios.”
Fauzi Ichsan, an economist at Standard Chartered Bank, said he expected private consumption to remain resilient this year due to low bank lending rates, higher consumer-credit growth and employment generated by real investment.
Last year, private consumption accounted for 58 percent of GDP thanks to election spending, rate cuts and stimulus measures.
Fauzi accepted that energy and commodity prices may rise as global demand increases on the back of the economic recovery. That may prompt the government to hike domestic fuel prices and electricity tariffs by 20 percent to 30 percent in the first quarter of this year.
“However inflationary pressures stemming from non-energy factors are likely to remain weak and the rupiah is expected to strengthen against the US dollar, limiting imported inflation,” Fauzi said. Standard Chartered expects inflation to climb to 5.5 percent this year from 2.8 percent in 2009.
Taimur Baig, an economist at Deutsche Bank, said Indonesia’s strong domestic demand would make the country more resilient to global economic problems.