Thursday November 17 2016
Indonesia Keeps Key Rate Unchanged at 4.75%
Bank Indonesia l Aloysius Unditu | aloy@tradingeconomics.com

The Bank Indonesia held its key interest rate steady at 4.75 percent at its November meeting as expected after two-25bps cuts in the previous two months. The central bank also kept its lending facility rate unchanged at 5.5 percent and its overnight deposit facility rate at 4.0 percent. Policymakers said the decision was taken in their response to maintain domestic economic growth.

The central bank mentioned an 'escalating' global economic uncertainty in global financial markets after the US election and said that it will continue to intervene in the foreign exchange market to keep rupiah stable against the dollar. The rupiah weakened sharply after presidential elections in the US due to capital outflows but stabilized after the central bank intervention.

Going forward, poliymakers said the Indonesian economy is expected to expand 5 percent this year and between 5 percent to 5.4 percent next year and inflation is seen in the range of 3 percent to 5 percent in 2017.  







Tuesday November 15 2016
Indonesia Trade Surplus Beats Expectations in October
Statistics OfficelAloysius Unditu | aloy@tradingeconomics.com

Indonesia posted a trade surplus of 1.21 billion USD in October of 2016, compared to a 1.01 billion USD surplus a year earlier and above market estimates of USD 1.03 billion, as exports grew more than imports. Overseas sales rose by 4.6 percent YoY to 12.7 billion USD in October, following a 0.1 percent fall in September and beat market estimate of a 4.3 percent rise. While imports rose 3.3 percent to USD 11.5 billion in October, below market estimate of a 4.9 percent increase. Exports fell 0.1 percent to USD 12.6 billion while imports fell 2.26 percent to USD 11.3 billion in the previous month. Trade surplus was upwardly revised to to 1.27 billion USD in September. From January to October 2016, trade surplus was recorded at 6.93 USD billion, lower than that 8.23 USD billion surplus in the same period a year earlier.

Year-on-year, overseas sales rose 4.6 percent to USD 12.7 billion, following a 0.6 percent fall in September while market estimated a 4.3 percent rise.

Imports went up 3.27 percent in October from a year earlier to USD 11.47 billion, compared to a 2.26 percent fall in September and beating consensus of a 4.90 percent increase. It was the first rise in 25 months and the fastest since August 2014, as purchases of non-oil and gas rose 6.33 percent while those of oil and gas declined by 13.13 percent.

Compared to the previous month, exports rose by 0.88 percent. Oil exports decreased by 2.85 percent and sales of non-oil and gas products went up 1.22 percent. Sales to most of the country's trading partners rose : China (+24.69 percent), Japan (+3.52 percent), the ASEAN countries (+0.72 percent). In contrast, sales declined to the EU countries (-0.19 percent), South Korea (-9.50 percent), the US (-4.66 percent), India (-0.69 percent), and Taiwan (-16.99 percent).

Compared to a month earlier, imports increased 1.55 percent, led by machinery and electrical equipment (+6.25 percent) and iron and steel (+8.43 percent).

In September, trade surplus was upwardly revised to USD 1.27 billion.

From January to October 2016, trade surplus was recorded at USD 6.93 billion, lower than a USD 8.23 billion surplus in the same period a year earlier.




Monday November 07 2016
Indonesia Economy Expands 3.20% QoQ in Q3
Statistics Office l Aloysius Unditu | aloy@tradingeconomics.com

Indonesia's GDP grew by 3.20 percent quarter-on-quarter in the September quarter of 2016, slowing from an upwardly revised 4.03 percent expansion in the previous three months and below market estimates of 3.22 percent growth. A faster increase in private consumption was unable to offset a drop in government spending and exports while investment slowed.

On the expenditure side, private consumption grew by 3.48 percent, faster than a 1.28 percent rise in the June quarter. Private non-profit spending advanced 4.26 percent (from +2.53 percent in the previous three months. Investment rose 4.06 percent, compared to a 2.55 percent rise in the second quarter. In contrast, government spending fell 0.20 percent, reversing from a 35.42 percent expansion in the preceding quarter. Exports dropped by 3.69 percent ( from +2.29 percent). Imports dropped 5.13 percent, (+3.05 percent).

On the production side, transport & storage rose the most by 5.34 percent, followed by agriculture (+4.69 percent), information and communication (+2.58 percent), mining & quarrying (+2.03 percent), other (+1.95 percent)government administration (+1.72 percent), business service (+1.56 percent), healthcare (+1.54 percent) and real estate (+0.47 percent) . In contrast, electricity and gas contracted by 1.38 percent, followed by education services (-1.31 percent).

Year-on-year, the economy expanded 5.02 percent year-on-year in the third quarter of 2016, compared to an upwardly revised 5.19 percent growth in the June quarter while market estimated a 5.04 percent expansion. 





Monday November 07 2016
Indonesia's GDP Growth at 3.2% QoQ in Q3
Statistics OfficelAloysius Unditu | aloy@tradingeconomics.com

Indonesia's GDP grew by 3.20 percent quarter-on-quarter in the September quarter of 2016, slowing from an upwardly revised 4.03 percent expansion in the previous three months and below market estimate of 3.22 percent growth. A faster increase in private consumption was unable to offset a drop in government spending and exports while investment slowed.

Indonesia's GDP growth expanded by 3.20 percent quarter-on-quarter in the September quarter of 2016, slowing from an upwardly revised 4.03 percent expansion in the previous three months and below market estimate of 3.22 percent growth. A faster increase in private consumption was unable to offset a contraction in government spending and exports while investment slowed. Investments expanded  (+2.53%), private spending (+3.48). In contrast,  exports fell (-3.69%), government expenditure (-0.20%).  


Monday November 07 2016
Indonesia GDP Growth Eases in Q3
Statistic of Indonesia l Chusnul Ch Manan| chusnul@tradingeconomics.com

The Indonesian economy expanded 5.02 percent year-on-year in the third quarter of 2016, compared to an upwardly revised 5.19 percent growth in the June quarter while market estimated a 5.04 percent expansion. While private consumption and investment slowed, government spending and exports declined.

In the September quarter, private consumption advanced 5.01 percent year-on-year, following a 5.04 percent growth in the preceding quarter. Private non-profit expenditure expanded by 6.59 percent (from +6.72 percent). Gross fixed capital formation grew by 4.88 percent (from +5.06 percent). In contrast, government spending declined by 2.97 percent, reversing from a 6.28 percent increase in the June quarter). Exports fell 6.0 percent, faster than a 2.73 percent decline in the second quarter. Imports shrank 3.87 percent (from -3.01 percent).
 
On the production side, information and communication recorded the highest annual growth rate of 9.20 percent, followed by finance & insurance sector (+8.83 percent), transport & storage (+8.20 percent), other services (+7.71 percent), business services (+6.95 percent), construction (+5.69 percent), electricity and gas (+4.89 percent), manufacturing (+4.56 percent), accommodation & food/beverages (+4.55 percent), government administration/defence (+3.81 percent), health care (+4.24 percent), real estate (+3.70 percent), wholesale and retail trade (+3.65 percent), agriculture (+2.8 percent), education services (+1.87 percent), water and waste management (+1.67 percent), mining and quarrying (+0.13 percent).

On a quarterly basis, the economy grew 3.20 percent, following an upwardly revised 4.02 percent grew in the previous three months and below estimates of a 3.22 percent growth. 
 

 




Thursday October 20 2016
Bank Indonesia Unexpectedly Cuts Key Rate to 4.75%
Bank Indonesia | Yekaterina Gucshina | yekaterina@tradingeconomics.com

The Bank Indonesia unexpectedly cut its key interest rate by 25 bps to 4.75 percent at its October 20th, 2016 meeting following a 25bps cut in September. The central bank also lowered its lending facility rate by 25bps to 5.5 percent and reduced its overnight deposit facility rate by 25bps to 4.0 percent. Markets were expecting the central bank to stand pat on monetary policy. Policy makers said that the decision aims to boost growth and lending.

Excerpt from the statement by the Bank Indonesia:

Bank Indonesia believes that the monetary easing is consistent with maintained macroeconomic stability, specifically inflation in 2016 that’s expected to fall near the floor of the target corridor, a better-than-expected current account deficit, bigger trade balance surplus and relatively stable exchange rate. Against a backdrop of global economic moderation, the eased monetary policy is expected to underpin efforts to stimulate domestic demand, including credit, in order to maintain economic growth momentum. Bank Indonesia will continue to coordinate with the government to ensure that inflation control, growth stimulus strenghtening, and implementation of structural reform, are well underway to support sustainable economic growth.

Domestic economic growth in the third quarter was down slightly from the previous projection. Consumption was indicated to improve but remained limited. On the other hand, private investment, particularly non-construction investment, is estimated to remain weak in line with the large installed production capacity. Meanwhile, Bank Indonesia predicts the impact of fiscal stimuli to remain somewhat limited as the government adjusts spending in the second half of the year. Externally, global economic moderation and sluggish world trade have undermined improvements in the real sector exports, despite several commodity prices starting to rebound. Consequently, Bank Indonesia predicts 2016 economic growth to be around the floor of the 4.9-5.3% (yoy) range.

Indonesia’s balance of payments is expected to record an increase of surplus, with a lower current account deficit. Current account deficit in the third quarter is estimated to fall below 2% of GDP, especially bolstered by trade surplus, in line with the rebound in primary commodity export price, as well as a decline of non-oil and gas imports. 

The rupiah remained stable with a tendency of appreciating. The rupiah appreciated by an average of 0.41% to a level of Rp13,110 per USD. The appreciation continues and on the third week of October, the Rupiah closed at a level of Rp13,005 per USD. At home, positive sentiment concerning the domestic economy, stemming from maintained macroeconomic stability together with sound implementation of the Tax Amnesty, bolstered rupiah appreciation. Externally, the rupiah appreciated as global risk surrounding the timing of the proposed FFR hike eased. Moving forward, Bank Indonesia will continue to maintain exchange rate stability in line with the rupiah’s fundamental value.

Bank Indonesia expects inflation to remain under control at a low level and, by the end of 2016, to fall towards the floor of the 4±1% target corridor. The Consumer Price Index (CPI) recorded inflation of 0.22% (mom) in September 2016, which is considered under control and consistent with historical trends. Consequently, CPI inflation stood at 1.97% (ytd) and 3.07% (yoy). 

Financial system stability was maintained along with banking system resilience. In August 2016, the Capital Adequacy Ratio (CAR) was recorded at 23.0% and the liquidity ratio (liquid assets/deposits) at a level of 21.1%. Meanwhile, non-performing loans (NPL) stood at 3.2% (gross) or 1.5% (net). The looser monetary policy stance is continuously transmitted through the interest rate channel as reflected by lower lending and deposit rates. In contrast, monetary policy transmission through the credit channel remained suboptimal, in line with limited demand, including low investment demand from corporations. Credit growth was recorded at 6.8% (yoy) in August 2016, decelerating from 7.7% (yoy) the month earlier.


Monday October 17 2016
Indonesia Trade Surplus Largest in 14 Months
Statistics Indonesia l Chusnul Ch Manan| chusnul@tradingeconomics.com

Indonesia posted a trade surplus of 1.21 USD billion in September of 2016, compared to a 1.03 billion surplus a year earlier and beating market consensus of a USD 0.45 billion. It was the largest trade surplus since July 2015 as exports fell much less than imports.


Year-on-year, sales dropped slightly by 0.59 percent to USD 12.51 billion, following a 0.74 percent decline  in August and market expecations of a 1.61 percent decrease. While sales of non-oil and gas products increased by 2.85 percent to USD 11.45 billion, those of oil and gas dropped by 26.97 percent to USD 1.06 billion. 

Imports decreased  by 2.26  percent to USD 11.56 billion, compared to a 0.49 percent fall in a month earlier and market consensus of a 3.76 percent increased. It was the 24th consecutive month of decline. Purchases of non-oil and gas product decreased 8.8  percent to USD 1.91 billion and those of oil and gas decreased by 0.95  percent to USD 9.65 billion.

Compared to the previous month, exports were down  by 1.84 percent. Oil exports declined  6.78 percent and sales of non-oil and gas products dropped 1.35 percent. By categories, outbound shipments declined for pearls, precious and semi-precious stones (-25.49 percen) and machine/mechanical equipment (-9.38 percent). In contrast, sales rose for:  fats/vegetable animal oils (+4.11 percent); ores, crust, metal ash (+94.3 ,percent) and tin (+68.05). Sales to most of the country's trading partners declined: the ASEAN countries (-3.74 percent), the EU countries (-0.40 percent), China (-0.73 percent), Japan (-5.73 percent) and South Korea (-7.61 percent). In contrast, sales rose to the US (+0.09 percent), India (+9.70 percent) and Taiwan (+15.45 percent).

Compared to a month earlier, imports decreased 8.78 percent. Purchases of oil and gas fell by 2.97 percent and those of non-oil and gas declined by 9.77 percent. Imports declined for all categories: consumption goods (-15.16 percent to USD 0.99 billion), raw materials (-7.24 percent to USD 8.48 billion), and capital goods (-11.98 percent to USD 1.82 billion).

In August  2016, trade surplus was upwardly revised to USD 0.38 billion.



Thursday September 22 2016
Indonesia Cuts Key Rate to 5%
Bank Indonesia | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The Bank Indonesia lowered its benchmark interest rate by 25 bps to 5 percent at its September 22nd, 2016 meeting, as widely expected. The lending facility rate and overnight deposit facility rate were also cut by 25 bps to 4.25 percent and to 5.75 percent. Policymakers said the decision was in line with continued macroeconomic stability, low inflation and relatively stable exchange rate.

Excerpt from the statement by the Bank Indonesia:


The ongoing macroeconomic stability, as evidenced by low inflation, a controlled current account deficit and relatively stable exchange rates, encouraged Bank Indonesia to ease monetary policy by lowering the BI 7-Day RR Rate. Against a sluggish global economic backdrop, the eased monetary policy stance adopted by Bank Indonesia is expected to strengthen efforts to boost domestic demand, thereby maintaining economic growth momentum while preserving macroeconomic stability. Bank Indonesia believes that by easing monetary policy, government efforts to stimulate sustainable growth through accelerated structural reforms will be strengthened. Furthermore, Bank Indonesia will continue to coordinate with the Government in preparing policy measures to ensure an optimal impact of the recently enacted Tax Amnesty on the national economy.

Domestic economic growth in Q-3 is still maintained, albeit not as strong as previously projected. Various indicators show signs of solid household consumption, while non-construction investment has not shown any significant signs of improvement. Private investors remain muted in line with consolidations in the private sector in response to demand that has not yet fully recovered. Meanwhile, Bank Indonesia expects limited fiscal stimuli as the Government adjusts spending in the second half of the year. In terms of the external sector, Bank Indonesia also forecasts the sluggish global economy and world trade to restrain export gains despite indications that prices of several export commodities have started to rebound. Consequently, Bank Indonesia acknowledges the pressing need for various measures to boost domestic demand and, thus, reinforce economic growth momentum. Therefore, economic growth for 2016 is predicted in the 4.9-5.3% range.

Limited rupiah depreciation was observed in August 2016, before rebounding thereafter in September. Accordingly, the rupiah depreciated by an average of 0.39% in the reporting month to a level of Rp13,163 per USD. Negative external sentiment concerning the timing of the proposed FFR hike after the minutes of the July Federal Open Market Committee (FOMC) were released precipitated rupiah depreciation. Nonetheless, the rupiah was observed to rebound 0.8% in the middle of September. The rebound was prompted by an increase in foreign capital as the negative sentiment surrounding FFR hike timing eased, as well as the ongoing implementation of Tax Amnesty.

Inflation remained low and is projected within the target corridor set for 2016, namely 4±1%. Milder inflationary pressures were reported after Eid-ul-Fitr this year, with deflation of 0.02% (mtm) recorded in August 2016, which is the lowest rate after Eid-ul-Fitr for the past five years, when inflation is typically considered the norm. Consequently, headline inflation was recorded at 1.74% (ytd) or 2.79% (yoy). Consequently, Bank Indonesia predicts inflation near the floor of the target corridor for 2016.


Thursday September 15 2016
Indonesia Trade Surplus Smallest in 7 Months
Statistics Indonesia l Rida Husna | rida@tradingeconomics.com

Indonesia recorded a USD 0.29 billion trade surplus in August of 2016, down from USD 0.33 billion surplus reported a year earlier while market estimated a surplus of USD 0.45 billion. It was the smallest trade surplus since January as exports fell more than imports.

Year-on-year, sales dropped slightly by 0.74 percent to USD 126.3 billion, following a 17.02 percent decline in July and market expecations of a 8.8 percent decrease. It was the slowest contraction in 23-month streak of falling as sales of non-oil and gas products increased by 2.76 percent to USD 11.51 billion while those of oil and gas dropped by 26.32 percent to USD 1.13 billion.

Imports also decreased marginally by 0.49  percent to USD 123.4 billion, compared to a 11.56 percent fall in a month earlier and market consensus of a 10.55 percent drop. It was also the 23rd consecutive month of decline. Purchases of non-oil and gas products fell 4.43 percent to USD 7.44 billion and those of oil and gas decreased by 35.77 percent to USD 1.47 billion.

Compared to the previous month, exports were up  by 32.54 percent. Oil exports rose  12.95 percent and sales of non-oil and gas products went up 34.84 percent. By categories, outbound shipments rose for: fats/vegetable animal oils (+18.17 percent); pearls, precious and semi-precious stones (+52.58 percent), vehicles and their parts (+50.03 percent), machine/mechanical equipment (+54.48 percent) and ores, crust, metal ash (+151.94 percent). In contrast, sales declined for: iron and steel articles (-54.79 percent), residual food industry (-17.66 percent), fertiliser (-63.67 percent), beverages (-2.10 percent) and milling output (-2.84 percent). Sales increased to most of the country's main trading partners: the ASEAN countries (+30.54 percent to USD 2.52 billion), the EU countries (+28.15 percent to USD 1.23 billion), China (+47.96 percent to USD 1.36 billion), Japan (+42.66 percent to USD 1.17 billion), the US (+36.81 percent to USD 1.36 billion), India (+36.34 percent to USD 890.2 million), South Korea (+37.01 percent to USD 498.6 million) and Taiwan (+12.03 percent to USD 194.9 million). In contrast, exports were lower only to Australia (-21.96 percent). 

Compared to a month earlier, imports went up 36.84 percent. Purchases of oil and gas increased by 16.55 percent and those of non-oil and gas declined by 40.90 percent. Imports rose for all categories: consumption goods(+60.43 percent to USD 1.17 billion), raw materials (+33.37 percent to USD 9.10 billion) and capital goods (+41.23 percent to USD 2.07 billion).

In July 2016, trade surplus was marginally revised to USD 0.51 billion.


Friday August 19 2016
Indonesia Holds New Key Rate at 5.25%
Bank Indonesia | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The Bank Indonesia left its new benchmark interest rate unchanged at 5.25 percent at its August 19th, 2016 meeting. The lending facility rate was also left unchanged at 4.5 percent but the overnight deposit facility rate was cut by 100 bps to 6 percent to narrow the corridor around the key interest rate. Policymakers officially adopted the 7-day reverse repo rate as the new benchmark, replacing the previous rate as earlier announced in April. The decision aims to improve the effectiveness of monetary policy transmission.

Excerpt from the statement by the Bank Indonesia:

The policy is in line with efforts to maintain macroeconomic stability, by keeping domestic economic growth momentum amid a sluggish against a backdrop of the ongoing global economic slowdown. Bank Indonesia believes that by maintaining macroeconomic stability, especially a controlled inflation within the target range, an improved current account deficit, and relatively stable exchange rate, rooms for monetary easing remains open.

Bank Indonesia will observe short-term domestic economic conditions and global economic developments, especially possible Fed Fund Rate hike. In addition, Bank Indonesia will constantly strengthen policy coordination with the Government in order to catalyse sustainable economic growth by accelerating structural reforms. Furthermore, Bank Indonesia will also continue to coordinate with the Government to prepare anticipative policy measures that ensure implementation of the Tax Amnesty will go smoothly and support government’s fiscal adjustment efforts.

The domestic economic growth accelerated in the second quarter of 2016 but remains uneven regionally and by sector. Economic growth in the reporting period was recorded at 5.18% (yoy), up from 4.91% (yoy) last quarter. Economic momentum was boosted by growing domestic demand in the form of government consumption and investment, as well as household consumption. Fiscal stimuli and the looser monetary policy stance have begun to show early signs of stimulating private and public consumption. Moving forward, however, Bank Indonesia predicts sustainable economic growth based on the looser monetary and macroprudential policy mix applied, coupled with the government’s policy packages. In contrast, a government less inclined to spend in the second half of the year could potentially undermine growth this year. Consequently, Bank Indonesia predicts economic growth in 2016 in the range of 4.9-5.3% (yoy), slightly down on the previous projection of 5.0-5.4% (yoy).

Rupiah appreciation continued in line with the promising domestic economic outlook and easing external risks. In the second quarter of 2016, the rupiah appreciated by an average of 1.59% to close at a level of Rp13,313 per USD. Rupiah momentum persisted into July 2016, gaining a further 1.72% to close at Rp13,112 per USD. Domestically, rupiah appreciation was supported by the encouraging domestic economic outlook in line with a maintained macroeconomic stability, alongside the recently enacted Tax Amnesty. In terms of the external sector, rupiah appreciation was driven by less risk on global financial markets due to the limited impact of the Brexit and the expected postponement of the next inevitable Federal Funds Rate (FFR) hike. Moving forward, Bank Indonesia will continue to maintain exchange rate stability in line with the rupiah’s fundamental value.

Low inflation was controlled within the target corridor for 2016 of 4±1%. CPI inflation was recorded at 0.69% (mtm) or 3.21% (yoy) in July 2016. Furthermore, headline inflation during Eid-ul-Fitr this year was controlled at a level below the historical average for the past four years due to concerted policy efforts and tight coordination between Bank Indonesia and the Government during the approach to Eid-ul-Fitr. Looking forward, policy coordination between Bank Indonesia and the Government to control inflation will continue, particularly in terms of VF inflation stemming from La Nina. Consequently, Bank Indonesia predicts inflation at the end of 2016 within the target corridor.