Regarding full-year 2014, economic expansion of Indonesia fell to a five-year low of 5.02 percent (y/y) amid global turmoil (low commodity prices impacting negatively on the country’s export performance) and domestic rebalancing (Bank Indonesia’s higher interest rate environment).

Indonesia's Quarterly GDP Growth 2012–2014 (annual % change):

 Year    Quarter I
   Quarter II    Quarter III    Quarter IV
 2014        5.14        5.03         4.92         5.01
 2013        6.03        5.81         5.62         5.72
 2012        6.30        6.40         6.17         6.11

Source: Statistics Indonesia (BPS)

According to the latest data from the Indonesian Automotive Industry Association (Gaikindo), Indonesian car sales (wholesale) declined 14 percent (y/y) to 282,250 vehicles in the first quarter of 2015. Amid slowing economic growth (a trend that started in 2011), Indonesians’ purchasing power has weakened, while Indonesian businesses are reluctant to purchase commercial vehicles due to the globe’s low commodity prices (which pressure operational costs). However, despite the negative figure at the start of 2015, Gaikindo has not altered its car sales target for 2015. The institution expects to see car sales reach 1.2 units this year, more-or-less flat from car sales in the preceding year.

Indonesian Car Sales (CBU):

 Month    Sold Cars 2012    Sold Cars 2013    Sold Cars 2014    Sold Cars 2015
 January           76,427           96,718          103,609           94,149
 February           86,486          103,278          111,824           88,738
 March           87,917           95,996          113,067           99,363
 April           87,144          102,257          106,124
 May           95,541           99,697           96,872
 June          101,746          104,268          110,614
 July          102,511          112,178           91,334
 August           76,445           77,964           96,652
 September          102,100          115,974          102,572
 October          106,754          112,039          105,222
 November          103,703          111,841           91,327
 December           89,456           97,706           78,802
 Total         1,116,230
        1,229,916
        1,208,019          282,250

Source: Gaikindo

Meanwhile, Indonesian cement sales also fell in the first quarter of 2015. Based on data from the Indonesian Cement Association (ASI), sales declined 3.3 percent (y/y) to 13.6 million metric tons in the January-March period. Primary reason for this decline is that several infrastructure and property projects are still in the preparation stage. For example, the Indonesian government has not started its ambitious one million homes program yet. Last month, Indonesian President Joko Widodo announced that the government would support the construction of one million additional homes across the archipelago over the next five years (the groundbreaking of this project is scheduled for 30 April 2015).

Widodo Santoso, Chairman of the Indonesian Cement Association, added that the rainy season at the start of 2015 also led to the delay of several large projects. However, given the government’s commitment to boost infrastructure development, the association targets to see a total of 62 million metric tons of cement sales in 2015, up 3.3 percent from last year.

Indonesian Cement Sales 2008-2015:

 Year    Cement Sales
   YoY Growth
 2015¹        62 million         +3.3%
 2014        60 million         +3.3%
 2013        58 million         +5.6%
 2012        55 million        +14.6%
 2011        48 million        +20.0%
 2010        40 million         +4.2%
 2009       38.4 million         +1.1%
 2008        38 million             -

¹ ASI target
Source: Indonesian Cement Association (ASI)

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