Confidence drops again in July: Danareksa survey

Confidence drops again in July: Danareksa survey

JAKARTA (JP): The confidence of chief executives in the
country's economy declined in July by 1.3 percent to a level of
116 percent, according to the latest survey conducted by the
Danareksa Research Institute.

The research agency said in a statement on Wednesday that the
decrease was recorded in different types of companies and across
all sectors, with the mining sector showing the largest drop of
11.2 percent to touch its lowest ever level of 117.5 percent.

The slide in business confidence coincides with the plunge of
the rupiah and the Jakarta Composite Index (JCI) as well as the
Consumer Confidence Index (CCI) since March.

Over the past four months, the rupiah, JCI and CCI have
plummeted by 12.6 percent, 18.5 percent and 14.2 percent
respectively.

While, at the same time, the business sentiment index slipped
by only 4.2 percent, the institute said.

The decreasing trend in these factors were unfolded when
domestic political tensions become more intensified.

"The simultaneous happenings, with the slower pace of the fall
in the business sentiment index compared to the other three
factors, suggests that businessmen are more resilient to
political volatility than portfolio players and consumers," the
institute said.

The business sentiment survey was conducted by the institute
to investigate the assessment of top business executives on
current economic and business conditions as well as their
expectations for the next six months.

The institute said business confidence in the credibility of
the government was found to be continuously deteriorating, as
reflected in the drop of the index by 8.1 percent to 119.8
percent, its lowest level ever.

The confidence index on the government's credibility in
maintaining political and social stability plunged by 9.9 percent
to 121.1 percent.

While the confidence index on the government's credibility to
uphold the law crashed to 101.3 percent after previously sagging
by 14.2 percent.

The institute's survey also found that the business
community's expectation index readings in July plunged to 128.5
percent from 131.4 percent in May.

"Top executives' confidence in the overall outlook in the next
six months continued to weaken," it said.

Executives' responses recorded in the survey regarding their
current business operations and financial performance and their
expectations for the next six months declined in all sectors and
all types of companies, except agriculture and state-owned
companies.

The sales expectations index fell for the third consecutive
month in a row and now stands at 154.7 percent, down 3.4 percent
from May.

The survey also shows that less upbeat sales expectations were
more uniformly shared across sectors and different types of
companies.

The sales expectation index, however, improved slightly in
agriculture, mining and state-owned companies. (cst)