Various international and national institutions estimate that Indonesia's economy will grow between 6.0 and 6.5 percent in 2013. Profit of Indonesian companies this year is projected to increase 20 to 22 percent. In recent years, many Indonesian companies that rely on domestic consumption have posted impressive profit figures due to the country's expanding economy (and burgeoning population), whereas companies engaged in commodities have seen their profits fall amid a drastic decline in demand and subsequent fall in commodity prices. With the current better forecasts for the economies of China, America and Japan in Q2-2013, demand for Indonesian commodities (in particular crude palm oil, metals and coal) is estimated to increase and should result in better performances of Indonesia's commodity exporting companies. Total profitability of Indonesian companies thus has a positive outlook.

Foreigners have kept high confidence in the Indonesian market as they have been pouring in money during Q1-2013: IDR 18.77 trillion (USD $1.95 billion) in stocks, IDR 10.23 trillion (USD $1.05 billion) in government bonds, and 65.5 trillion (USD $6.75 billion) in foreign direct investment (FDI). Analysts assume that the stock index will rise to 5,300-5,500 by the end of the year.

A number of risks that can damage current positive outlooks are high inflation (reduction in subsidized fuel), a weakening trade balance, a weakening IDR rupiah, and falling foreign exchange reserves.

Stock Index P/E Ratio x
25 April 2013
Index Performance
1 Jan 25 Apr 2013
Economic Growth
   Projection 2013
     18.2             15.70%             6.2
     28.2           33.97%             0.8
     17.8          13.10%             5.3
South Korea
     33.6          -2.28%             3.1
Malaysia      15.7           1.03%             5.1
Singapore      13.5           5.39%             2.0
China - Shanghai      12.0          -3.08%             8.3

Source: Investor Daily