Grace Sihombing and Claire Jiao – Indonesian consumers were the most pessimistic in 16 years as the government imposed prolonged lockdown measures to curb the virus outbreak that crippled hospitals and led to thousands of deaths.
The consumer confidence index fell to 77.3 in August, down from 80.2 in July and well into the below-100 territory that signals pessimism for the future economic situation, Bank Indonesia said in a survey released on Wednesday. It was the index's lowest reading since October 2005, according to Bloomberg-compiled data.
Consumers were growing more concerned over job availability and salary as well as the need to purchase durable goods. Still, respondents expect business activity to pick up over the next six months as the vaccination program continues and new infections have eased.
"Businesses have yet to recover and face higher uncertainty due to the delta variant wave and stricter mobility restrictions," said PT Bank Permata economist Josua Pardede. Private consumption, a key driver of Indonesia's gross domestic product, could slow to around 3% in the third quarter, PT Bank Central Asia economist David Sumual added.
Indonesia is looking for ways to reopen some parts of its economy while maintaining strict health protocols and other restrictions through Sept. 20. The government will do a trial run to reopen select tourist sites and shopping centers, as well as extend dine-in allowance at restaurants in areas where Covid-19 caseloads have fallen.