Calm Before the Storm
Pre-pandemic, the Conference Board® Global Consumer Confidence™ Survey in collaboration with Nielsen, a global measurement and data analytics company, unveiled that Indonesia’s Consumer Confidence Index (CCI) was rather stable at 125 in the first quarter of 2019, putting Indonesia as the fourth most optimistic country in the world after Philippines (133), India (132) and Vietnam (129).
There are three main indicators to measure the CCI based on the premise of consumer optimism regarding Local Job Prospect, Personal Financial State, and Intention to Spend (in the next 12 months). For Indonesia, optimism for Local Job Prospect soared up from 68% in the fourth quarter of 2018 to 72% in the first quarter of 2019. The Personal Financial State showed a positive insight up to 83% compared to 79% in the previous quarter. Meanwhile, only more than half (56%) of consumers had appropriate times to buy durable goods and shared their Intention to Spend on things they needed and wanted in the first quarter of 2019.
The Moment When the Pandemic Hit
As of 29 April, Indonesia has confirmed 9,771 positive cases of Covid-19 with 14% of the patients survived (1,391) and 8% deaths from the virus (784) according to the Indonesian Ministry of Health. The fast spread of the virus has Indonesians pondering the short and long-term effects especially with much of the economy slowed down and the Enforcement of Large-Scale Social Restriction being extended from 23 April to 22 May.
With the pandemic causing significant economic slowdown over the next few months and a huge negative shock to economies worldwide, consumers are being forced to dramatically change their viewing behaviours.
Year-to-date, Indonesia’s CCI declined to 113.8 in March 2020 from 117.7 in the previous month, a study revealed by Trading Economic and Bank Indonesia. The Covid-19 outbreak has clearly affected the index progress which cooled to its weakest since September 2016, as five of the six main sub-indices deteriorated – economic outlook (down by 5.5 points to 124.3), current economic conditions (down by 2.2 points to 103.3), job availability compared to six months ago (down 4.1 points to 86.0), job availability expectations (down 3.1 points to 108.4) and income expectations for the next six months (down 5.7 points to 138.2). The sub-index of current income, however, remained stable at 114.0.
The Indonesia’s Consumer Confidence Index suggests pessimism reading from last year’s perception (125) to the result of the Q1 2020 (113.8). The consumer's perception on the current economic condition and their expectation on the condition of the economy in the future has drifted down.
Since the closing down of many businesses provided a huge negative shock to the country’s economic growth, their perception on the current economic condition has impacted limited job availability whilst they expected that the future’s economic condition would hang on the business activities within the next few months which might not be as strong as those in the previous months.
Meanwhile, the Indonesian central bank, Bank Indonesia, is in a move to safeguard the value of the currency and maintain the stability of the rupiah and is ready to pass new stimulus package with plans to help cushion risks of the Covid-19 impacts on the economy.