Consumer confidence rises to 15-month high

Consumer confidence rises to 15-month high

Bloomberg, Jakarta

Indonesia's consumer confidence in January reached a 15-month record, as people in rural areas expect more income during the elections, a survey showed.

A key gauge measuring consumer confidence gained to 97.7 last month, the highest since October 2002, analysts Stefanus Susanto and David Sumual of Danareksa Research Institute, which commissioned the AC Nielsen study, said in a report. It was 94 in December.

Low-income earners and consumers in rural areas contributed the most in the improved confidence, on "plausible hopes that elections, during which political parties throw funds to them in a bid to obtain their votes, would serve as an extraordinary boon," Danareksa said.

Indonesia will hold its first direct election to vote Parliament members in April and a direct presidential election, also its first ever, in July.

Consumers were also more optimistic about the growing economy, and expect the faster growth "would ultimately usher in new job opportunities," Danareksa said.

Indonesian central bank expects the economy to expand as much as 5 percent this year, helped by consumer spending, faster than 4.1 percent last year. About 40 million Indonesians are either jobless or have work of less than 35 hours a month.

The more optimistic look on the economy lured more consumers to spend their money on durable goods such as houses and audio- visual equipment. The proportion of the 1,700 respondents that plan to buy durable goods in the next six months jumped to 25.4 percent from 19.2 percent in December, Danareksa said.

Lower interest rates would probably boost purchases of houses, cars and electronic goods this year, Bank Niaga's president Peter Stok said on Thursday. The lender plans to boost loans, mostly mortgage, car and personal loans, by 30 percent this year.

Last year, as benchmark interest rates on one-month central bank bills fell 468 basis points, or 4.68 percentage points, the construction sector grew 6.7 percent on the year, the third- fastest-growing sector after utility and transportation.