Indonesia's Statistics Agency (BPS) announced today that Indonesian inflation was recorded at 0.21 percent (month-to-month) in November 2015. On an annual basis, inflation eased markedly to 4.89 percent in November, from 6.25 percent in the preceding month, as the impact of the subsidized fuel price hike in November 2014 vanished from the annual inflation rate. In November 2014 inflation had accelerated 1.50 percent (m/m). Next month, Indonesia's annual inflation will most likely ease even more sharply.

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Bank sentral Indonesia (Bank Indonesia) memprediksi inflasi headline akan mencapai 2,79% pada basis year-on-year (y/y) dalam setahun penuh 2015, di bawah cakupan target bank sentral yaitu 3-5%. Inflasi di Indonesia pada tahun ini rendah, berakumulasi menjadi 2,16% di 10 bulan pertama tahun 2015, dan Bank Indonesia memperkirakan bahwa laju inflasi akan tetap terkontrol di dua bulan terakhir tahun 2015.

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In Indonesian media more and more (unofficial) information circulates about the third installment of the government's economic policy package. This third installment, which is expected to be unveiled next week by Indonesian President Joko Widodo, involves lowering prices of gas, diesel and electricity (for industries) to avert more layoffs in Indonesia's manufacturing industry. Meanwhile, the government may lower lending rates (by cutting unnecessary costs) in order to boost credit expansion in Southeast Asia's largest economy.

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Pemerintah Indonesia mungkin akan memotong harga bahan bakar minyak di kuartal 4 tahun 2015 dalam rangka mendongkrak daya beli masyarakat dan mengurangi biaya yang ditanggung para pelaku manufaktur lokal. Tindakan ini akan menjadi bagian dari paket stimulus Pemerintah yang diprediksi akan diumumkan minggu depan. Pada tanggal 9 September dan tanggal 29 September, Pemerintah Indoensia telah mengumumkan dua paket kebijakan ekonominya. Kontras dengan dua paket kebijakan yang pertama, paket ketiga seharusnya memberikan hasil dalam jangka waktu pendek.

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Bank sentral Indonesia (Bank Indonesia) memperkirakan bahwa inflasi akan menurun di bawah 7% pada basis year-on-year (y/y) di bulan September 2015 akibat harga bahan-bahan pangan yang rendah dan menurunnya harga-harga yang ditetapkan (termasuk bahan bakar dan listrik) setelah periode Ramadan dan Idul Fitri. Gubernur Bank Indonesia Agus Martowardojo mengatakan bank sentral memprediksi inflasi mencapai sekitar 6,95% (y/y) di bulan September.

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The Asian Development Bank (ADB) has revised its economic growth forecast for Indonesia in 2015 from 5.2 percent year-on-year (y/y) to 5 percent (y/y). During a press conference on Tuesday (07/07) in Jakarta, Edimon Ginting, Deputy Country Director for Indonesia of the Philippines-based ADB, said that there are three reasons that explain why the ADB has become less optimistic about Indonesia’s gross domestic product (GDP) growth in 2015. Last year, Indonesia’s economic growth slowed to a five-year low of 5.02 percent (y/y).

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Populasi Indonesia yang bertumbuh cepat dikombinasikan dengan pertumbuhan ekonomi yang subur dan kurangnya investasi di infrastruktur telah menyebabkan kurangnya kualitas dan kuantitas infrastruktur di Indonesia pada saat ini. Situasi ini menyebabkan peningkatan tajam dalam biaya logistik dan menghalangi untuk mengembangkan dan merealisasikan potensi perekonomian nasional dan regional (sebuah sistem logistik yang efisien penting untuk pembangunan sosial ekonomi Indonesia). Kabar terakhir, belanja Pemerintah untuk pembangunan infrastruktur akan segera dimulai.

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Indonesian state-owned energy company Pertamina raised the price of pertamax, a 92-octane gasoline, by 2.3 percent per 1 May 2015 as the result of recovering global oil prices. On Java, Indonesia’s most populous island, the price of pertamax rose by IDR 200 to IDR 8,800 (USD $0.68) per liter. Outside Java, fuel prices are generally more expensive due to high logistics costs. The price of premium, the low-octane gasoline which was heavily subsidized until the start of the year, was left unchanged at IDR 7,400 (USD $0.57) per liter.

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Contrary to earlier reports the Indonesian government has not decided yet to completely phase out production and consumption of low-octane gasoline (known as premium) in Indonesia. Last week state-owned energy company Pertamina said that premium, a subsidized fuel that was introduced under the Suharto regime in order to support the population’s purchasing power (by making transportation costs artificially low) would be gradually replaced by 90-octane pertalite, a higher-grade fuel, starting from May 2015.

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In line with other Asian emerging market currencies, the Indonesian rupiah is depreciating against the US dollar on Monday’s trading day (20/04). According to the Bloomberg Dollar Index, Indonesia’s currency had depreciated 0.25 percent to IDR 12,882 per US dollar at 13:00 pm local Jakarta time. However, Head of Research at NH Korindo Securities Reza Priyambada believes that the currency cannot depreciate much further as positive economic data provides enough support for the rupiah.

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The Energy and Mineral Resources Ministry of Indonesia reported that government spending on energy subsidies in full-2022 reached IDR 157.6 trillion (or approx. USD $10.5 billion), well below the target that was set by the central government for 2022 (namely at IDR 211.1 trillion or approx. USD $14.1 billion). So, this certainly is good news for the government’s budget balance.

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It has been more than a week since the Indonesian government raised its subsidized fuel prices (Pertalite, Pertamax, and automotive diesel fuel) by an average of slightly over 26 percent. One of the most interesting things is to see whether this decision leads to overall growing prices in Indonesian society. After all, fuel is crucial for the movement of goods and services, and has a significant impact on logistics costs.

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While one month ago we read (in Indonesian media) that Indonesian President Joko Widodo vowed no increase in prices of subsidized fuels before the end of 2022, the situation suddenly changed. Based on reports in Indonesian media in the second half of August 2022 there were growing signs that the government was busy preparing a significant increase in prices of subsidized fuels (involving Pertalite and Pertamax gasoline fuels as well as automotive diesel oil) to safeguard a healthy budget balance for the government.

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Ahead of the legislative and presidential elections (scheduled for April 2019) the Indonesian government is unwilling to impose impopular measures. One of the side-effects is that subsidy spending has gone beyond the target that was set in the 2018 State Budget. Lets take a closer look at spending on energy subsidies in Indonesia so far this year.

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The decision of Indonesia's central bank (Bank Indonesia), last week, to cut its key interest rate (BI rate) by 0.25 percent to 7.00 percent and to cut the reserve-requirement ratio for commercial banks' rupiah deposits by 1 percent to 6.5 percent is a decision that should boost household consumption in Indonesia in 2016, improve people's purchasing power, give rise to a stronger automotive and property sector, and boost liquidity at local banks (hence providing room for an acceleration of credit growth in Southeast Asia's largest economy).

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After having experienced two consecutive months of deflation in September and October, Indonesia is expected to see inflation again in November, primarily on higher food prices (chicken meat and rice). Agus Martowardojo, Governor of Bank Indonesia, expects an inflation rate of 0.2 percent (month-on-month) in November. This would mean that inflation in full-year 2015 is likely to reach 3 percent (y/y), in line with earlier estimates and within - or perhaps slightly below - Bank Indonesia's target range of 3 - 5 percent (y/y) of inflation in 2015.

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The government of Indonesia unveiled the last installment of a series of three stimulus packages on Wednesday (07/10). The first two installments had been unveiled last month. In general, these stimulus packages aim to boost economic growth of Indonesia (which has slowed to a six-year low) and restore investors' confidence in the Indonesian rupiah and stocks. When markets believed that the Federal Reserve would soon raise its key interest rate, Indonesia was plagued by severe capital outflows pushing the rupiah to a 17-year low.

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Sejak akhir 2011 Indonesia telah dibebani oleh defisit transaksi berjalan struktural yang menguatirkan baik para pembuat kebijakan maupun para investor (asing). Meskipun pihak berwenang di Indonesia telah mengimplementasikan reformasi kebijakan dan penyesuaian perekonomian di beberapa tahun terakhir, defisit transaksi berjalan Indonesia hanya sedikit berubah di 2015. Baik Bank Dunia maupun Bank Indonesia memprediksi bahwa defisit transaksi berjalan akan tetap berada sedikit di bawah 3% dari produk domestik bruto (PDB) di 2015, sangat dekat dengan batasan yang memisahkan defisit yang sustainable dan yang unsustainable.

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Although most emerging market stocks fell, Indonesian stocks and the rupiah showed a solid performance on Thursday (21/05). The rupiah appreciated 0.40 percent to IDR 13,122 per US dollar according to the Bloomberg Dollar Index, while the benchmark stock index of Indonesia (Jakarta Composite Index) rose 0.39 percent to 5,313.21 points. Most emerging stocks fell due to weak data from China (despite a series of stimulus). However, Indonesian stocks were supported by news about its credit rating and dividend announcements.

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Inflation in Indonesia is expected to accelerate to 6.80 percent year-on-year (y/y) in April 2015, from 6.38 percent y/y in the previous month, according to the central bank of Indonesia (Bank Indonesia). As global oil prices have somewhat recovered from their recent lows, they add inflationary pressures in Indonesia (higher transportation costs). On a month-on-month (m/m) basis, Indonesian inflation is expected to be around 0.35 percent in April. This figure would be in sharp contrast to ‘normal’ April inflation.

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