Consumer confidence falls

Consumer confidence falls

The Jakarta Post, Jakarta

Consumer confidence in Indonesia, the main engine that fueled
economic growth by an impressive 2.38 percent in the third
quarter, fell dramatically last month, which could spell trouble
for Indonesia if this translates into consumer spending.

A monthly survey by Danareksa Research Institute found that
all indices related to consumer spending plunged in October,
bringing an end to two months of upward trends dating back to the
inauguration of Megawati Soekarnoputri as Indonesia's fifth
president.

"The weakening rupiah, which broke through the 10,000 level
against the dollar, shook consumer confidence," the agency said
in its latest report, to be published on Monday.

Hope for an economic recovery, encouraged by the change in
national leadership in July, appeared to have lost its momentum
in the absence of any fundamental change in the economy, it said,
adding that the honeymoon period of Megawati's government had now
ended.

The government's failure to promptly deal with domestic
political and economic consequences of the Sept. 11 terrorist
attacks in the United States affected confidence, the report
indicated.

The consumer confidence index fell to 107.7 in October from
116.8 points in September.

The tone of the survey remained positive given that an index
above 100 still means that optimism outweighs pessimism.

The biggest plunge was recorded in the Consumer Confidence in
the Government Index, which fell to 134.0 from 152.2.

Danareksa attributed the decline to a "lack of leadership" by
the government in overcoming social and economic problems.

Criticism has mounted against Megawati's economic ministers to
the point that chief economics minister Dorodjatun Kuntjoro-Jakti
and his colleagues are no longer considered a "dream team", which
is the way they were greeted when selected in August.

The survey on consumer confidence interviewed 1,700 households
in five regions regarding their spending patterns.

The Central Bureau of Statistics said last week that real
gross domestic product grew by 2.38 percent in the third quarter,
driven largely by strong consumer spending.

While the government statisticians appeared hopeful that the
3.5 percent economic growth target for 2001 could be achieved,
doubts have crept in among forecasters about prospects for 2002.