Consumers lose confidence in future of economy: Survey

JAKARTA (JP): The consumer confidence index in October fell by 14 percent to 52.2 from 60.6 the previous month, indicating a loss in consumer confidence in the future of the country's economy, according to a survey made by Danareksa Research Institute.

"Optimism toward a better life remains high, but its level has plunged," it said, explaining that an index reading above 50 indicates that positive responses outnumber negative ones.

The institute said consumers were no longer as confident as they were before on current conditions, and their optimism level had dropped 16.7 percent to 33.8 from 40.5 in September.

Expectations for things to be brighter in six months also dropped to 66 from 75.7 or 12.9 percent previously.

"The plummet in the present situation index has been in step with the worsening conditions in the country," the institute said.

The survey also indicated an overall decline in the present and expectation indices which, if not given immediate attention, had the potential of dragging down the country's growth level, it said.

Although a solid downward trend has not yet surfaced, results from the survey over the past six months suggest that the index exhibits a seesawing pattern with a downward trend, the institute said in a statement.

"This pattern is of concern as the oscillation of hopes among consumers underpins the falsification of past hopes for a better life leading to a self-perpetuating pessimism," it said.

Consumers have lost substantial confidence in the future of Indonesia's overall economy and the local economy where they live, it said, adding that they have also lost confidence in their job, career and family income.

"They are not as sure as they were before of the present condition of the national and local economy, and job availability," it said.

The institute said that endless bickering among the nation's top leaders had caused a higher degree of uncertainty about how the country was going to be governed.

The emergence of some issues as well as unpleasant events in Atambua, Wamena, Maluku, North Maluku and Aceh during the past month have also caused uncertainties about the future.

Amid the grim global outlook, falls in Indonesian financial assets, both in the rupiah and stocks, appear to also cause consumers to be less confident in what to do now and in six months time, the institute said.

The survey also indicates a less upbeat near-term expectation, with the expectations index in the local economy falling by 12.1 percent, the index measuring employment security sliding by 9.3 percent and the index measuring family income falling by 10.9 percent, it said.

"Some cooling in growth is not yet at work but it is already in sight," the institute said.

Consumer confidence is designed to measure the mood of consumers toward buying, helping to predict buying patterns. It is designed to capture the effect of events that may affect buying patterns, but are not immediately reflected in other economic indicators.

The survey is based on a sample of at least 1,700 Indonesian households across six different main areas, and conducted for Danareksa Research Institute by AC Nielsen.

The sample for this national survey is selected to represent Indonesian consumer characteristics, demographically and economically. (tnt)