Indonesian consumer confidence plunges in May

Jakarta (VNA) - Indonesia’s consumer confidence index (IKK) dropped to 77.8 in May from 84.83 in the previous month, indicating consumer pessimism about the domestic economy’s prospects, a Bank Indonesia (BI) survey has shown.

As of May 27, more than 1.79 million people had lost their jobs as many nonessential businesses shut down to comply with government restrictions, according to data from the country’s Manpower Ministry.

Meanwhile, the country’s economy grew by only 2.97 percent in the first quarter, the weakest since 2001, because of cooling household spending and investment during the COVID-19 pandemic. Consumer spending grew by just 2.84 percent year-on-year in the first quarter, much lower than the 5.01-percent growth recorded in the same period last year, according to the Jakarta Post newspaper.

BI said household spending is the key pillar of the Indonesian economy, as it contributed about 58 percent to the country’s GDP in the first quarter alone.

“For the next six months, however, consumers remain upbeat about economic conditions supported by the prospect of job availability and higher income as the COVID-19 pandemic subsides,” the newspaper quoted the report as saying.

To support the country’s economic recovery, the government will widen the budget deficit to 6.34 percent of GDP this year to cover a stimulus package of Rp 677.2 trillion (47.7 billion USD) aimed at jump-starting economic recovery./.