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Consumers worried about economy, reduce spending
Indonesiaâs consumer confidence worsened in the first half of this year as the economy deteriorated with no signs of a quick recovery, latest surveys show
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ndonesia's consumer confidence worsened in the first half of this year as the economy deteriorated with no signs of a quick recovery, latest surveys show.
According to a MasterCard Inc. survey, Indonesia's consumer confidence faced an 'extreme deterioration' in the first half, falling the most in Asia as the outlook for the economy and stock market worsened.
The 25.8-point slide from the second half last year to 64.3 on the MasterCard index was the steepest among 17 markets in the region, the credit card company said. Three other Southeast Asian nations ' Thailand, Myanmar and Malaysia ' are also among the top five in decline, according to the survey that also tracked employment, income and quality of life.
There was 'a significant halo effect' from the 2014 elections, Matthew Driver, who heads global products and solutions in the Asia-Pacific region at MasterCard, said in an interview with Bloomberg on Tuesday. 'But all of the commentary has shown a little bit of a frustration with trying to make that administration work.'
The survey showed consumer confidence for Indonesia fell to its weakest in three years, undermining moves to increase domestic spending in the country that has Asia's fastest rising inflation rate.
Meanwhile, according to Nielsen Global Survey of Consumer Confidence and Spending Intention, Indonesia's consumer confidence index dropped only three points to 120 in the second quarter, but it is far below the 131 in India and the 122 in the Philippines.
'They're concerned about whether the economy will get better,' Nielsen Indonesia managing director Agus Nurudin told the press on Wednesday.
The survey, conducted from May 11 to 29, showed that the level of consumers' concern about the national economy had increased 4 percent to 37 percent compared to 33 percent in the first quarter.
Consumers who intended to spend their money on primary and secondary goods in the next 12 months also dropped 3 percent to 53 percent from the first quarter.
'The economic slowdown directly impacts the consumer,' Agus said 'They are very focused on basic things and hold back their spending.'
In the survey, 81 percent of consumers had expressed that they had taken measures to save their money by cutting their spending on secondary needs such as gadgets, new clothes and out-of-home entertainment.
The trend was observed during Ramadhan and Idul Fitri in July, when the sales of major retailers recorded only a modest increase. In the past, sales during Ramadhan and Idul Fitri were more than double those of normal days.
The director of the Institute for Development of Economics and Finance (INDEF), economist Enny Sri Hartati, said that the decline of people's purchasing power mainly resulted from the rise in prices of basic needs and that had affected consumer confidence.
'It has been evident that purchasing power has declined. For example, we can see the drop in retail business,' she told The Jakarta Post.
Indonesia's economy grew by 4.7 percent in the first quarter of this year, its lowest level since 2009 amid the country's weak export, domestic consumption, as well as the government's lower than expected spending. The International Monetary Fund and the World Bank lowered their estimates on Indonesia's 2015 GDP growth recently respectively, from 5.2 to 4.7 percent percent previously as there were no signs of a quick recovery in the economy. (fsu)
