Consumer confidence continues to rise: Danareksa

Consumer confidence continues to rise: Danareksa

The Jakarta Post, Jakarta

Consumer confidence in Indonesia rose for the third
consecutive month in April, as economic fundamentals improved and
consumers placed more faith in the government's ability to spur
growth, according to a survey.

The Danareksa Research Institute, which conducted the survey,
said the consumer confidence index (CCI) rose by 62 percent in
April to 98.8 from 93.0 in March, with both the present situation
index and the expectation index on the uptick.

The improved CCI "offers tangible evidence of a recovery story
in the economy that justifies higher consumer optimism toward the
government", the institute said in a statement.

Confidence in the government increased for the first time
since Sept. 11, rising 2.5 percent to 117.7 in April, as
consumers placed greater confidence in the government's ability
to improve their welfare.

In particular, respondents cited the government's ability to
spur economic growth as giving them hope for a fall in
unemployment.

The 12.4 percent increase in the present situation index was
mainly the result of a 15.5 percent rise in sentiment about the
job market, with consumers now less worried about being laid off.

There was also a marked increase in optimism about the future
as the economic recovery gathers pace, with all of the components
of the expectation index showing picking up.

To compile the CCI every month, Danareksa and AC Nielsen
interview at least 1,700 Indonesian households in six main areas
across the country.

The index ranges from a score of zero to 200, with zero
meaning very pessimistic and 200 very optimistic. If the index is
below 100, pessimistic responses outnumber optimistic ones. if
the index is above 100, the reverse is true.

Danareksa noted that despite the rise in April, consumer
confidence was still below 100. But the major upswing in
sentiment means that confidence is now on "the threshold of
optimism".

On the back of rising optimism, the percentage of respondents
who said they were ready to purchase durable items in the next
six months rose to 23.1 percent from 22.6 percent the previous
month.

This increase will further strengthen the conviction that the
economic fundamentals of the country are catching up with the
upbeat confidence.

A prime catalyst for the strengthening fundamentals was a
combination of lower interest rates and a stronger rupiah,
Danareksa said.

The weighted average interest rate on Bank Indonesia's one-
month SBI promissory note was 15.81 percent at last week's
auction, compared to above 18 percent toward the end of last
year. The rupiah continued to rise on Tuesday, closing at Rp
8,870 compared to about Rp 10,500 at the end of last year.