Consumer confidence up in March: Survey

Consumer confidence up in March: Survey

Debbie A. Lubis, The Jakarta Post, Jakarta

Consumer confidence rose for a second consecutive month in
March, indicating a shift in consumer sentiment from pessimism to
optimism over the country's economic recovery, Danareksa Research
Institute said in its latest monthly survey released on Thursday.

Danareksa said that the consumer confidence index edged up to
93 from 89.5.

It said that the rise was followed by an increase in both the
present situation index and the expectation index.

Danareksa said that the present situation index rose by nearly
5 percent to 72.4 last month, reflecting stronger conviction that
the economy was on the rise.

The institute said the expectation index climbed nearly four
points to 108.6 last month compared to 104.7 in the previous
month as consumers felt confident that the existing orderly state
of affairs would continue to provide an impetus for economic
growth.

The government is targeting an economic growth of 4 percent
this year, to be driven mainly by consumer spending as export and
investment are expected to slowdown amid the weak global economic
conditions.

Danareksa said that perception of an upward trend in the
economy had caused self-reinforcing and self-justifying forces
which created "a liquid and busy economy."

It added that sanguine consumers spend more, reactivating the
circular flow of funds from consumers to producers through a
chain of retailers and wholesalers.

"...the rest of consumers would follow suit to join the
bandwagon in lemming-like behavior that would galvanize public
opinion on an economic recovery," Danareksa said.

The institute surveyed some 1,700 households across six
different areas to measure the buying mood of consumers and
predict their buying patterns that affected the country's
economy.

The survey, however, said the government should preclude
public doubts about economic recovery as the consumer confidence
in the government stayed virtually unchanged at 114.9, after a
steady decline since August 2001.

"If people are dissatisfied with the way matters are
developing, bearish sentiment will come to the fore and the
upturn will turn into a downturn, especially when overriding
fears of the uncertain future overwhelm the environment and
arouse the precautionary instinct of consumers" Danareksa said.

It added that the fears would encourage consumers to take a
fast exit from the economic system, causing liquidity to dry up
and spending to dwindle.