Thursday January 19 2017
Indonesia Leaves Monetary Policy Unchanged
Bank Indonesia | Joana Taborda | joana.taborda@tradingeconomics.com

The central bank of Indonesia left its key interest rate on hold at 4.75 percent on January 19th 2017 as widely expected, aiming to protect against global financial risks including capital outflows and inflationary pressures from higher food and utility prices. Policymakers also kept its lending facility rate unchanged at 5.5 percent and its overnight deposit facility rate at 4.0 percent.

Excerpts from Bank Indonesia Press Release: 

The decision was consistent with Bank Indonesia’s effort to maintain macroeconomic and financial system stability, while keep optimizing domestic economic recovery amid uncertainties in the global financial market. After performing relatively well throughout 2016, improvement in the national economic outlook is expected to continue, with stronger growth combined with maintained macroeconomic and financial system stability. Bank Indonesia will continue to monitor risks in 2017. Globally, the risks include the policy directions taken in the US and China and global oil price hike, while the domestic risks are linked to the impact of administered prices (AP) on inflation. Consequently, Bank Indonesia will continue to optimise its monetary, macroprudential and payment system policy mix in order to maintain macroeconomic and financial system stability, while considering the impact on the optimilization of economic recovery. Furthermore, Bank Indonesia will strengthen policy coordination with the Government, focusing on inflation control to keep within the target range, as well as structural reforms to support sustainable economic growth.

Bank Indonesia predicts the global economy to improve, supported by gains in the US and China, albeit several risks that need to be observed. Looking forward, several global risks shall continue to demand vigilance, including the impact of US fiscal and international trade policy, Federal Funds Rate (FFR) hikes that could raise the cost of borrowing, economic and financial rebalancing in China, as well as geopolitical risks.

In 2017, however, the economic recovery should continue, driven by exports and investment as financing increases from bank loans and nonbank financing. On the other hand, stable household consumption is also predicted.

After pressures following the result of the US election, the rupiah appreciated in December as capital flowed back onto domestic financial markets. Point-to-point, the rupiah appreciated 0.59% (mtm) to close at a level of Rp13,473 per USD in line with a deluge of capital inflow, primarily to government debt securities (SUN). In contrast, outflow from the domestic stock market decreased after the FFR hike, with a reversal noted at the end of December 2016 to record an inflow. Point-to-point, in 2016, the rupiah appreciated 2.32% (ytd) on the positive investor perception of the domestic economic outlook, which attracted non-resident capital. Bank Indonesia will remain vigilant of risks from the global financial uncertainty, however, while continuing to stabilise the rupiah in line with the currency’s fundamental value and maintaining market mechanisms.

Bank Indonesia maintained low inflation throughout 2016, towards the floor of the inflation target, namely 4±1%. CPI inflation in December 2016 was recorded at 0.42% (mtm), down from 0.47% (mtm) the month earlier. Therefore, inflation of 3.02% (yoy) was recorded for the year. Low inflation was supported by low core inflation and minimal administered prices, while inflationary pressures on volatile foods remained. Such achievements were supported by Bank Indonesia policy and increasingly solid coordination with the central and local governments to control inflation. Moving forward, efforts to control inflation will confront risks that demand vigilance, primarily in the form of administered prices adjustments along with government’s structural reform policies in energy subsidies, as well as risks of volatile food inflation. To that end, policy coordination between Bank Indonesia and the Government will constantly be strengthened.




Monday January 16 2017
Indonesia Trade Balance Swings to Surplus in December
Statistics Indonesia l Rida Husna | rida@tradingeconomics.com

Indonesia posted a trade surplus of 0.99 USD billion in December of 2016, compared to a 0.16 USD billion deficit a year earlier. Figure came above market estimates of a 0.84 USD billion surplus, as exports rose much more than imports.

Year-on-year, exports jumped 15.57 percent to 13.77 USD billion, following a 21.34 percent in the prior month and beating market consensus of a 13.27 percent rise.  It was the third straight month of increase, as sales of non-oil and gas products went up 18.11 percent to 12.54 USD billion while those of oil and gas dropped by 5.22 percent to 1.10 USD billion.  

Imports went up 5.82 percent to 12.78 USD billion, following a 9.88 percent growth in a month earlier while markets expected a 3.5 percent growth. It was also the third consecutive month of growth, as purchases of non-oil and gas rose 7.91 percent to 11.09 USD billion while those of oil and gas fell 6.15 percent to 1.69 USD billion. 

Compared to the previous month, outbound shipments rose 1.99 percent, as oil exports increased by 11.66 percent, followed by sales of non-oil and gas products (+1.13 percent). By categories, outbound shipments rose for: mineral fuels (+9.06 percent), rubber and rubber goods (+14.81 percent), apparel not knitted (+22.03 percent); ore, cruct and gray metal (+29.19 percent) and iron & steel (+44.82 percent). In contrast, sales decreased for: machinery/electrical equipment (-10.44 percent); jewelry, gems (-32.0 percent), vehicles & parts (-17.26 percent), machinery/aircraft mechanics (-8.30 percent) and goods from iron & steel (-28.52 percent). Sales went up to most of the country's trading partners: the ASEAN countries (+4.24 percent), the EU countries (+6.94 percent), China (+2.82 percent), the US (+8.88 percent), South Korea (+26.06 percent) and Taiwan (+5.72 percent). In contrast, exports fell to Japan (-3.98 percent), India (-13.58 percent) and Australia (-32.66 percent).

Compared to the prior month, inbound shipments increased by 0.88 perent. While purchases of non-oil and gas rose 1.35 percent, those of oil and gas declined by 2.13 percent. Imports went up the most for consumption goods (+27.25 percent to 1.31 USD billion, followed by capital goods (+7.49 percent to 2.23 USD billion). In contrast, purchases of raw material declined by 3.38 percent to 9.25 USD billion.

Considering full year of 2016, exports fell 3.95 percent from a year earlier to 144.43 USD billion while imports declined by 4.94 percent to 135.65 USD billion. That brought a trade surplus of 8.78 USD billion during the period, larger than a 7.67 USD billion surplus recorded in 2015.




Thursday December 15 2016
Indonesia Trade Balance Swings to Surplus in November
Statistics of Indonesia l Chusnul Ch Manan| chusnul@tradingeconomics.com

Indonesia posted a trade surplus of 0.84 USD billion in November of 2016, reversing from a 0.4 USD billion deficit a year earlier. Figure came slightly above market estimates of 0.82 USD billion surplus, as exports rose much more than imports.

Year-on-year,  exports jumped 21.34 percent to 13.50 USD billion, compared to a 4.60 percent rise in October and beating market consensus of a 10.0 percent growth. It was the fastest growth since September 2011, as sales of non-oil and gas products went up 28.75 percent to 12.39 USD billion, those of oil and gas dropped by 26.32 percent to 1.10 USD billion.
 
Imports increased by 9.88 percent  to 12.66 USD billion, following a 3.27 percent gain in the prior month while market expected a 0.1 percent rise. It was the second straight month of increase, as purchases of non-oil and gas rose 10.31 percent to 10.90 USD billion and those of oil and gas increased by 7.27 percent to 1.76 USD billion.
 
Compared to the previous month, outbound shipments rose 5.91 percent. While sales of non-oil and gas products went up 28.75  percent to 12.39 USD billion, those of oil and gas dropped by 26.32 percent to 1.10 USD billion. Sales rose to most of the country's trading partners : the US (+13.22 percent), the EU countries (+9.92 percent), India (+8.81 percent), China (+5.85 percent), Japan (+13.22 percent), the ASEAN countries (+0.18 percent), South Korea (+2.41 percent) percent) and Taiwan (+18.28 percent).
 
Compared to a month earlier, imports went up 10.00 percent, led by machinery and electrical equipment (+15.23 percent), machinery and mechanical equipment (+8.34 percent) and optical equipment (+39.73 percent). Imports rose for all categories: consumption goods (+7.32 percent to 1.03 USD billion), raw materials (+11.63 percent to 9.56 USD billion) and capital goods (+4.23 percent to 2.07 USD billion).
 
In October 2016, trade surplus was marginally revised to 1.24 USD billion.

From January to November 2016, trade surplus was recorded at 7.80 USD billion, compared to a 7.83 USD billion surplus in the same period a year earlier.


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.