Indonesia's consumer optimism was getting stronger in November, indicated by the consumer confidence index (CCI) which increased to 124.2 - Photo by TheInsiderStories

JAKARTA (TheInsiderStories) – Indonesia’s consumer confidence index increased to 126.4 in December 2019 from 124.2 in the previous month, Bank Indonesia (BI) wrote in the latest survey published today (01/07). The increased driven by improved consumer perceptions of current economic conditions and consumer expectations of future economic conditions.

“Improved consumer perceptions of current economic conditions are driven by better perceptions of job availability, current income, and purchases of durable goods,” the central bank stated, adding the consumer expectations for better economic conditions in the future will be influenced by earnings expectations and improving job availability.

This was the strongest reading since June, with all main sub-indices rising: economic outlook up by 0.5 points to 139.6. The current economic conditions went on 3.8 points to 113.1. Then job availability compared to six months ago goes up 6.6 points to 101.1.

Furthermore, job availability expectations went up 0.4 points to 127.1, current income up 1.1 points to 120.7), and income expectations for the next six months rose 1.5 points to 152.7, the central bank noted.

Consumers are forecasting an upward pressure on price increases in the next 3 months (March 2020). This is indicated by the 3-month price expectation index that will increase compared to the index in the previous month, the bank said.

The increase in price pressure was influenced by consumer expectations of price adjustments in the administered prices group. In addition, the upward pressure on prices in the next 6 months (June 2020) is expected to increase in line with prices that remain high after Idulfitri, it adds.

Consumer optimism is one of the factors influenced inflation and economic growth. While, the government strives to bring Indonesia’s economy to grow in the range 5.6 – 6.2 percent, from the 5.3 percent targeted in 2019. The figure mainly supported by investment which is expected to increase by 7.0-7.4 percent and exports rose at 5.5-7.0 percent.

On the supply side, economic growth is expected to be supported by the industrial sector which will increase between 5.0-5.5 percent. While the unemployment rate is expected to fall to 4.8-5.0 percent, accompanied by a reduction in the poverty rate in the range of 8.5-9.0 percent.

To achieve that target, Coordinating Minister for the Economy Airlangga Hartarto said the government had mapped out strategies and priority steps to be taken to face economic challenges in 2020, both internally and externally.

First, the government will increase economic growth through structural transformation to strengthen domestic demand and international trade performance.

Second, maintaining macroeconomic stability by positioning domestic prices and the exchange rate at a stable and competitive level. Third, increase inclusiveness and a sustainable economy.

“Increasing competitiveness is also one thing that is the focus of attention. Sustainable economic growth is also needed to get out of the poverty line and encourage human development,” Hartarto said.

Regarding investment, the government will optimize the online single submission system, increase the effectiveness of the investment acceleration task force, relax the negative investment list, and approve investment priority sectors, Hartarto noted.

In addition, the implementation of the tax holiday and super deduction tax and the development of the national strategic project, special economic zones, and industrial estates are also the mainstay policies. The government is also preparing the omnibus law, aims to further simplify the licensing process, the minister said.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com