The view of the economy became much more positive, but consumers only feel marginally better about their financial well-being.

The quarterly survey is conducted by InsightAsia, a market research agency that specializes in the Asia Pacific region, and published in the Indonesian Consumer Confidence Index Report.

Urban Indonesians have become more positive about the current state of the economy and the outlook of the next year. Their view of the current economy has improved from negative to neutral.

The expectation of the future was already optimistic in the first quarter and has become rosier in the recent measurement. Most Indonesians expect a decrease of unemployment in the next year.

The report demonstrates that the perception of financial well-being has improved slightly. In the first quarter 53 percent of urban Indonesians were unsatisfied with their financial well being. In the second quarter this dropped to 44 percent.

So, even though there is a small improvement in the second quarter, the general feeling is still negative, as only 22 percent is satisfied and 34 percent is neutral. A large proportion of consumers in Indonesia still feel that this is a bad time to buy major household items like furniture, a refrigerator or a television.

JP/Irma

However, consumers are optimistic about the development of their financial well-being in the next
12 months, despite their expectation that the cost of living will increase — particularly of food, transportation and education. 73 percent of the working respondents is optimistic about keeping their job and 83 percent thinks their income will increase somewhat.

The rise in consumer confidence occurs alongside recent financial reports by the Indonesian government that indicate that the drop in economic growth in Indonesia has stopped and recovery is setting in, forecasting 4.3 percent growth in 2009.

Even though the Indonesian economy was hurt by a drop in exports, the current economic growth is still positive at about 4 percent in the first half versus the same period in 2008, and is expected to accelerate towards its previous growth level of 6 percent in 2010, according to the government and Bank Indonesia.

The Consumer Confidence Index shows that consumers overall feel the current economic recession is passed its lowest point and believe that the economy will recover during the next year.

But even though the Indonesian economy has found the path to recovery, the positive forecasts by
the government and Bank Indonesia are uncertain. New instabilities in the global financial market or domestic disruptions can prolong the recession and bring down consumer confidence.

The results of the third quarter survey will indicate if the increase of consumer confidence in the second quarter is the start of a positive trend or just a temporary uplift.


The writer is the head of consumer confidence index at Insight Asia Research Group and can be contacted at consumerconfidence@insightasia.com

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