The latest consumer survey of Indonesia's central bank (Bank Indonesia) indicates that consumer confidence in Indonesia has improved - turning pessimism into optimism - in November on expectations of better economic conditions. Bank Indonesia's consumer confidence index, which is based on 1,700 household respondents in six major cities in Indonesia, rose to 103.7 points in November from 99.3 points in the preceding month. A reading below 100.0 signals that consumers are pessimistic.
Indonesian consumers have become more upbeat about current incomes in Southeast Asia's largest economy (+10 points to 109.3 points from a reading of 106.7 points in the preceding month). Meanwhile, although still in pessimistic territory, consumers' perceptions about job availability in Indonesia rose 10 points to 76.8 points (from 66.8 in October). Perceptions about the appropriate time to purchase durable goods rose from a reading of 88.9 points in October to 91.7 points in November. Lastly, people's expectations of job availability in the coming six months improved by 4.4 points to 96.8 points in November. All in all, despite improving, there is still some pessimism regarding economic conditions.
Moreover, respondents also signaled that they expect an increase in food and energy prices in the first half of 2016. This perception is due to the extended (El Nino-inflicted) dry season and the government's plan to cut subsidies for electricity (450-900 VA) in 2016.
Economic growth of Indonesia slightly improved in the third quarter of 2015, accelerating to 4.73 percent (y/y) from 4.67 percent in the previous quarter, primarily on improving government spending on infrastructure projects. However, it is a concern that respondents are still in the pessimistic zone regarding the timing of durable goods purchases and job availability as household consumption is the main contributor to Indonesia's economic growth, accounting for about 55 percent of total growth.