Consumer confidence continues to decline<\/p>\n
JAKARTA (JP): Indonesia's consumer confidence continued to
\nworsen last month due to fears that civil unrest might erupt and
\ndegenerate into violence, according to research conducted by the
\nDanareksa Research Institute.<\/p>\n
The consumer confidence index, which has been on the decline
\nnow for four consecutive months, fell further to 96.3 in May from
\n97.9 in the previous month marking an increase in pessimism with
\nlosses were recorded in both the present situation index and the
\nexpectation index, Danareksa said on Wednesday.<\/p>\n
\"The present situation index ended down 2.5 percent at 77.7 on
\nmounting economic and political uncertainties, while the
\nexpectation index posted a further loss of 1.1 percent to 110.3
\nas consumers grappled for direction amid confusion over domestic
\npolitical developments,\" Danareksa said.<\/p>\n
The institute said that consumers were worried about their
\nlivelihoods as sentiment was already grim on fears of inflation
\nresulting from the unceasingly bad political news.<\/p>\n
\"Both rural and urban respondents were pessimistic about the
\ncurrent situation,\" the institute said.<\/p>\n
Overall confidence across the archipelago was bearish with
\npessimistic responses outweighing optimistic responses, and with
\nthe sentiment index for rural respondents moving into negative
\nterritory at 97.5 in May as compared to 102.7 in April, the
\ninstitute said.<\/p>\n
The institute also said the confidence index for family income
\nsagged after the 30 percent hike in fuel prices which is to be
\nfollowed by a 20 percent hike in power charges next month. Both
\nhikes represent desperate attempts by the government to plug the
\nballooning budget deficit.<\/p>\n
\"These hikes will further slash disposable family income and
\ncome hot on the heels of the income erosion caused by inflation
\nin May,\" the institute said.<\/p>\n
Consumers were concerned that protracted high inflation and
\nhigh interest rates with a volatile and weakening rupiah could
\ndrag the country into a period of stagflation, adding to the risk
\nthat the country may have to endure another costly bank
\nrecapitalization program if interest rates continue to climb, the
\ninstitute said.<\/p>\n
The institute said lingering doubts over the prospects of a
\nsustainable economic recovery in the second half of 2001 and the
\ninflation threat had unsettled consumers and caused their
\nsentiment on job availability over the next six months to drop to
\n98.1 from 103, the lowest in the history of the survey.<\/p>\n
The job market concerns came amid deteriorating relations
\nbetween workers and entrepreneurs, and continued labor unrest in
\nthe country, with a price-wage spiral emerging that would make
\nlife even harder, it said.<\/p>\n
\"The country is now in a critical situation and facing threats
\nthat could lead to the breakup of the nation,\" the institute
\nwarned.<\/p>\n
A combination of massive debts, a crumbling rupiah and rising
\ninterest rates all threatened to destroy the chances of recovery,
\neven if there were political stability, the institute said.<\/p>\n
According to the survey's findings, consumers will opt to
\nreduce spending on durables over the next six months.<\/p>\n
The number of respondents planning to cut spending on durables
\nrose to 77 percent in May from 73.5 percent in April, the
\ninstitute said.<\/p>\n
\"This reduction, which has already been apparent over the last
\ncouple of months, will increase the likelihood of the economy
\nending up with slower growth ahead,\" the institute concluded.
\n(03)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/consumer-confidence-continues-to-decline-1447893297",
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