Consumer confidence increases: Danareksa

The Jakarta Post, Jakarta

Indonesian consumer confidence strengthened in the first half of the year from the same period last year on the back of significant improvements in macroeconomic indicators, according to the latest survey by the Danareksa Research Institute.

Danareksa said that with greater confidence in the economy, consumers would have more of an appetite to purchase durable goods in the second semester.

The Consumer Confidence Index (CCI) climbed to 95.3 percent in June, from 91.4 percent in May and 91.6 at the start of the year, according to the survey, which was released on Wednesday.

"The first half economy appears to have been progressing remarkably, notably in June when all signs of progress appear unambiguous," Danareksa said.

It pointed out that during the first half of this year, the rupiah appreciated from 8,968 per US dollar to 8,285, the Jakarta Composite Stock Index rose 23.56 percent to 505.5 points from 409.1 points and Bank Indonesia's benchmark interest rate declined by 3.36 percent to 9.53 percent.

Of even greater significance for consumers was the year-to- date inflation rate of 1.23 percent, down from 2002's first half rate of 4.46 percent.

"Accordingly, confidence in the economy strengthened, with new job recruitments not as scarce as before," the survey said.

It added that with optimism of a sustained economic recovery running high, "people expect the second-half economy to fare even stronger as to create vacancies for job seekers and for existing breadwinners to experience higher family income with cheaper goods to buy".

All of these positive developments increased the confidence of consumers in the government to steer the economy, stabilize prices, ensure security, develop public utilities and uphold the law.

Favorable conditions have increased consumers' appetite for durable goods in the second half of the year, with 24.3 percent of consumers wishing to buy durable goods from 23.6 percent early in the year, it said.

This should bode well for hopes of continued robust consumption, which has been the main driver of the country's economic growth during the past couple of years.

Some analysts, however, said earlier that domestic consumption had begun to diminish due to weak exports, declining investments and rising unemployment.

They suggested that economic growth in the second quarter of this year would slow from the previous quarter due to weakening domestic consumption.

The Danareksa survey was conducted in cooperation with AC Nielsen, which interviewed 1,700 households in six key areas of the country.