Consumer confidence strengthens on peaceful election

The Jakarta Post, Jakarta

People's confidence in the economy strengthened markedly in June thanks to a peaceful campaign period during the run-up to the July 5 presidential election, Danareksa Research Institute (DRI) said in its latest consumer confidence survey released on Tuesday.

The DRI said the consumer confidence index rose from 97.7 in the beginning of the year to 100.7 in June, a level of confidence not seen for two years.

It added that people were more confident of further economic recovery in the second half of the year as indices that gauge sentiment on job and family income prospects during the second half rose 1.4 percent and 3.3 percent to 103.4 and 111.3, respectively.

"Against this backdrop, people's appetite for durable products has improved, with the proportion of consumers planning to buy durable goods in the second half jumping from 18.7 percent to 20.3 percent," DRI said.

The economy is projected to grow by 4.8 percent this year. Domestic consumption has been the main engine of growth over the past couple of years, contributing more than 70 percent to gross domestic product.

The DRI also said that confidence in the government improved in June, with the government index rising to 119.1 from 111.9 in the previous month.

It said that people were more confident that the government was able to keep the nation secure and orderly, uphold justice, stabilize prices, refurbish public utilities and sustain growth momentum in the second half.

But optimism in the economy would face another test in the lead-up to election runoff in September.

"Should the second round of the presidential election proceed without any confidence-impairing events, Indonesia's upcoming president will be greeted with fabulous growth momentum in the beginning of the last quarter of 2004."