Consumers upbeat over economic outlook: Survey

JAKARTA (JP): Indonesian consumers have confidence that the economy is on the rise and economic conditions will improve over the next six months, according to a March consumer confidence survey held by Danareksa Research Institute.

The institute said that for the first time since October 1999, the percentage of consumers claiming current conditions were good outweighed the percentage claiming otherwise.

The institute, a unit of state-owned Danareksa Securities, said consumers remained upbeat on the economic outlook despite domestic social and political uncertainties.

"The positive expectations typically point to the active pace of economic recovery underway and underline the characteristics of an economy that is at the incipient stage of a business cycle upswing," Danareksa said in its survey of some 1,725 Indonesians.

Danareksa said the positive view on the current economic condition was attributed to improvements in the current overall economic and job market conditions.

Danareksa said that although the majority still believed jobs were difficult to find, the proportion of optimistic responses was increasing compared to its February survey.

It said that most respondents anticipated that general prices would be higher in the next six months due to the expected higher fuel and electricity prices.

The government raised electricity rates early this month and plans to increase fuel prices in the near future.

"In line with the expectations of higher prices, the majority of consumers in major cities continue to expect interest rates to rise," Danareksa said.

"Just like in the previous survey, consumers in major cities continue to be bearish over the value of the rupiah," it added.

"Another troubling trend is that consumers in major cities are rather cautious in their expectations for stock prices, despite the fact that the number of optimists still outnumbers that of pessimists," it said.

It said the recent announcement of the delay in the disbursement of International Monetary Fund loans appeared to be the reason behind the consumers' negative responses on the rupiah and stock price outlooks.

The IMF delayed the disbursement of its US$400 million loans to the country initially scheduled to be made earlier this month because the government failed to meet its end-March deadline in completing various economic reforms.

But the IMF said late last week that it would disburse the loans later in May after the government managed to complete the reform programs on April 8 and April 12.

Indonesia has been under the intensive care of the IMF after the economy was hit by the economic crisis that started in the middle of 1997.

But there are signs that the economy is improving. Bank Indonesia expressed confidence last week that the 3 percent to 4 percent gross domestic (GDP) growth and "underline" inflation of 3 percent to 5 percent target this year could be attained.

Danareksa, however, said the prospects of economic recovery continued to be overshadowed by the fact that only 30 percent of the respondents intended to buy durable goods in the next six months.

"The results of the survey indicate that respondents will remain skeptical of private consumption spending over the next two quarters," it said. (rei)