Indonesians are far more confident than Australians

Consumer Confidence in Australia and largest neighbour Indonesia has diverged massively since the height of the Australian mining boom in 2010-11. Indonesian Consumer Confidence soared following the Global Financial Crisis in 2008-09 and while the ANZ-Roy Morgan Australian Consumer Confidence Rating improved significantly it has never reached the heights of its northern neighbour.

In October 2017 Roy Morgan Indonesian Consumer Confidence is at 153.8 more than 40pts above the figure for ANZ-Roy Morgan Australian Consumer Confidence for the same month of 113.3 although Australian Consumer Confidence has improved slightly over the past few weeks and is now at 115.8 on the first weekend of December.

However, it wasn’t always like this. In the years of 2007-2010 Consumer Confidence in Australia and Indonesia was relatively similar and Australian Consumer Confidence was in fact higher throughout 2007, only dipping below Indonesian Consumer Confidence in mid-2008 as it reached a quarterly low of 94.4 in the December Quarter 2008.

In contrast Indonesian Consumer Confidence had already bottomed at 102.0 in the June Quarter 2008 – notably, this figure was still above the neutral rating of 100 indicating on balance Indonesians were still optimistic about the state of the Indonesian economy even at their lowest point in confidence over the last decade and from that point Indonesian Consumer Confidence increased sharply from 2008-2012.

Australian v Indonesian Consumer Confidence (2007-2017)

Source: Roy Morgan Single Source Australia averaging interviews with 4,000 Australians aged 14+ per month and Roy Morgan Single Source Indonesia averaging interviews with 2,000 Indonesians aged 14+ per month between 2007-2017.

Since two brief dips below 140 in the first half of 2012 (February 2012 – 136.8 and April 2012 – 139.6) Indonesian Consumer Confidence hasn’t looked back averaging 151.4 since May 2012 and for the majority of the last five-and-a-half years hovering between 145-155 and reaching a high of 161.4 twice in 2014.

In contrast Australian Consumer Confidence has generally been ‘range-bound’ between 110-120 apart from two notable breakouts: the election of the Abbott Government in September 2013 saw Australian Consumer Confidence peak at 122.3 while the poorly received first Federal Budget of Joe Hockey saw the monthly Consumer Confidence figure drop to 102.4 in May 2014 – the weekly figure actually dipped below 100 on the weekend of May 24/25, 2014 (99.3).                           

Comparing Indonesian & Australian Consumer Confidence by the Questions

Analysing the two series more closely reveals that it is the forward-looking indicators that are most responsible for the huge differential between Indonesian and Australian Consumer Confidences.

*The Roy Morgan Consumer Confidence Rating is 100.0 plus the simple unweighted average of the difference between the percentage of respondents who give a favourable and those who give unfavourable answers to five key questions.

Questions 2, 3 & 4 deal with personal financial situations over the next 12 months and the conditions of the local economy over the next year and next five years. Adding the differences on these three forward looking indicators shows Indonesia has a positive differential of +222 compared to Australia’s positive differential of +41 – in favour of Indonesia by +181 and equal to 36.2pts on the Consumer Confidence* Rating scale of a total difference of 38pts.

Michele Levine, CEO, Roy Morgan, says although Australian Consumer Confidence has performed well since the GFC, confidence in Australia’s largest neighbour Indonesia has clearly out-performed with high Indonesian Consumer Confidence supporting high GDP growth:

“Since 2012 the ANZ-Roy Morgan Australian Consumer Confidence Rating has averaged a very respectable 114.2, including a high of 122.3 in September 2013 with the election of the Abbott Government, however this pales when compared to the powerful performance of Indonesian Consumer Confidence during the same time period.

“Roy Morgan Indonesian Consumer Confidence has averaged a stellar 150.8 during the same time period and is currently at a two-and-a-half year high of 153.8 in October 2017. The high level of Indonesian Consumer Confidence has powered average Indonesian GDP growth over the past decade of 5.6% twice as high as Australia’s average GDP growth of 2.8%

“Analysing the two series closely reveals that it is the forward looking indicators dealing with a families future financial situation and the broader economy that have consistently pushed Indonesian Consumer Confidence far higher than in Australia and this continues today with positive differential on the three forward-looking indicators responsible for 36.2pts out of the 38pt difference between the latest Indonesian Consumer Confidence of 153.8 and the latest Australian Consumer Confidence of 115.8.

“The next elections in Australia and Indonesia are both due in mid-2019 – the Indonesian Presidential & General Elections are set for April 2019 while the next Australian Federal Election is due by May 2019 and its possible both countries could go to the polls on the same day for the first time.

“Comparing the Consumer Confidence of the two countries in recent years, and the average GDP growth that both countries have seen during the same time period shows that Indonesian President Joko Widodo is certainly facing a more favourable environment to seek a second victory in the Indonesian Presidential Elections than Australian Prime Minister Malcolm Turnbull will face at the next Australian Federal Election – assuming of course that Turnbull will still be the Prime Minister.”

The monthly Roy Morgan Indonesian Consumer Confidence Rating is based on interviews with an average of 2,000 face-to-face interviews conducted throughout Indonesia, not just a handful of cities. The survey includes the Top 23 cities, smaller cities and towns as well as many more villages in the rural hinterland, reflecting all of Indonesia. Women & men aged 14 and over were randomly selected during the months between 2007 – October 2017. The ANZ-Roy Morgan Australian Consumer Confidence Rating is conducted on a weekly basis with a representative sample of about 1,000 Australians aged 14+ around Australia.

The latest ANZ-Roy Morgan Consumer Confidence Monthly Report is available on the Roy Morgan Online Store. It provides demographic breakdowns for Age, Sex, State, Region (Capital Cities/ Country), Generations, Lifecycle, Socio-Economic Scale, Work Status, Occupation, Home Ownership, Voting Intention, Roy Morgan Value Segments and more.

Click here to purchase the ANZ-Roy Morgan Consumer Confidence – Monthly Detailed Report in Australia.