Consumer Confidence in Indonesia Declines in December 2014

Several conclusions can be drawn from the latest Consumer Confidence Index. Firstly, Indonesian consumers are less optimistic about the current condition of the Indonesian economy compared to the situation six months ago, evidenced by a decline in the index of purchases of durable goods. Secondly, the index showed that Indonesian consumers have become less optimistic about economic conditions in the next six months, evidenced by consumers' expected decrease in business activity and reduced job availability in Indonesia.

Indonesian consumers are concerned about accelerated inflation brought about by higher subsidized fuel prices. Inflation hit 8.36 percent (y/y) in December 2014 and implies weakening purchasing power. Meanwhile, the economic growth in Indonesia has been slowing since 2011, meaning reduced job availability. In the third quarter of 2014 GDP growth slowed to 5.01 percent (y/y), the slowest quarterly growth pace in five years.

 
Inflation in Indonesia:

Month	Monthly Growth           2013	Monthly Growth           2014
January	1.03%	1.07%
February	0.75%	0.26%
March	0.63%	0.08%
April	-0.10%	-0.02%
May	-0.03%	0.16%
June	1.03%	0.43%
July	3.29%	0.93%
August	1.12%	0.47%
September	-0.35%	0.27%
October	0.09%	0.47%
November	0.12%	1.50%
December	0.55%	2.46%
Total	8.38%	8.36%

^{Source: Statistics Indonesia (BPS)}

Inflation of Indonesia 2008-2014:

	2008	2009	2010	2011	2012	2013	2014
Inflation (annual percent change)	9.8	4.8	5.1	5.4	4.3	8.4	8.4

^{Sources: World Bank}

Indonesia's Quarterly GDP Growth 2009–2014 (annual % change):

Year	Quarter I	Quarter II	Quarter III	Quarter IV
2014	5.22	5.12	5.01
2013	6.03	5.89	5.62	5.78
2012	6.29	6.36	6.16	6.11
2011	6.45	6.52	6.49	6.50
2010	5.99	6.29	5.81	6.81
2009	4.60	4.37	4.31	4.58

^{Source: Statistics Indonesia (BPS)}

Gross Domestic Product of Indonesia 2006-2013:

	2006	2007	2008	2009	2010	2011	2012	2013
GDP (in billion USD)	285.9	364.6	432.1	510.2	539.4	706.6	846.8	878.0
GDP (annual percent change)	5.5	6.3	6.1	4.6	6.1	6.5	6.2	5.8
GDP per Capita (in USD)	1,643	1,923	2,244	2,345	2,984	3,467	3,546	3,468

^{Sources: World Bank, International Monetary Fund (IMF) and Statistics Indonesia (BPS)}

However, the survey also indicated that consumers are increasingly optimistic about public infrastructure projects as the government managed to create more fiscal room due to scrapping fuel subsidies. On a separate occasion Indonesian Finance Minister Bambang Brodjonegoro said that he expects GDP growth in the range of 5.5 to 5.8 percent (y/y) in 2015 as the government has more room to invest in basic infrastructure (including railway and ports) and agriculture. Moreover, Brodjonegoro expects to see higher investment growth as the Indonesia Investment Coordinating Board (BKPM) introduces its one stop service to smoothen lengthy permit procedures. Exports, however, are not expected to improve markedly in 2015 due to prolonged sluggish global demand.

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