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Strict curbs 'necessary' for Q4 consumer confidence rebound
While the PPKM Darurat may negatively affect consumer confidence and retail sales this quarter, an economist said that strict enforcement of the new restrictions would maintain consumer expectations toward a fourth-quarter rebound in consumer confidence.
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span style="background-color:#FFFFFF;">With domestic consumption already hanging in the balance in June, the imposition of the emergency public activity restrictions (PPKM Darurat) for most of July is expected to tip consumer confidence and retail sales into lower levels in the coming months.
The latest data from Bank Indonesia (BI), released on Friday, showed that the retail sales index stood at 202.3 in June with 4.5 percent year-on-year (yoy) growth, a much slower pace than the 14.7 percent yoy growth recorded in May due to the travel ban imposed during the Ramadan-Idul Fitri holiday season.
In contrast, BI data released on Thursday showed that the consumer confidence index (CCI) had strengthened to 107 in June, up from 104 in May as consumers started feeling more optimistic over Indonesia’s economic outlook.
“This condition needs to be maintained and observed in line with the implementation of the PPKM Darurat,” BI wrote in a statement on Thursday.
Read also: Govt expects Indonesia to miss 2021 GDP growth target
Officials and economists expect the PPKM Darurat from July 3 to 20 to dampen domestic consumption in the third quarter of this year, as the emergency restrictions ban restaurant dine-in services, mandate work from home, close shopping malls and tighten travel checks, among other stricter curbs.
The government enacted the emergency restrictions for Java and Bali to stem a second wave of COVID-19 that has seen more than 10,000 new cases per day since mid-June and has paralyzed Java’s healthcare system.
