Global credit rating agency Standard & Poor’s remains the only credit rating agency among the big three to maintain its BB+/stable rating on Indonesia’s sovereign credit (which is one notch below investment grade). Both Fitch Ratings (BBB-/stable) and Moody’s Investor Service (Baa3/stable) had already brought Indonesia back to investment grade in 2011 and 2012. Standard & Poor’s has been reluctant to raise Indonesia’s status as it wants to see more results from the country’s economic policy reforms.

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Setelah mengalami dua bulan deflasi berturut-turut, Indonesia kembali mengalami kenaikan Indeks Harga Konsumen pada bulan Maret 2015. Menurut data Badan Pusat Statistik (BPS), Indonesia mencatat kenaikan inflasi 0,17% pada basis month-to-month (m/m) pada bulan Maret. Hasil ini sejalan dengan proyeksi para analis. Pada basis year-on-year (y/y), inflasi Indonesia naik 6,38% dari bulan yang sama di tahun kemarin, sedikit lebih tinggi dari 6,29% (y/y) yang tercatat di bulan Februari. Inflasi inti negara meningkat menjadi 5,04% (y/y) di bulan Maret.

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The central bank of Indonesia (Bank Indonesia) estimates that Indonesia’s inflation rate in March will be around 0.3 to 0.4 percent month-to-month (m/m), slightly higher than its earlier forecast of around 0.28 percent (m/m). Later this week, Statistics Indonesia will release the country’s March inflation figure. In February inflation eased to 6.29 percent year-on-year (y/y) - from 6.96 percent (y/y) in the preceding month - amid declining fuel and food prices despite some inflationary pressures caused by higher rice prices.

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Despite some protests in Indonesia’s capital city of Jakarta, the Indonesian government raised the price of subsidized low-octane gasoline (premium) from IDR 6,900 (USD $0.53) per liter to IDR 7,400 (USD $0.56) over the weekend (a 7.2 percentage point price increase). Meanwhile, the price of subsidized diesel (solar) was raised from IDR 6,400 (USD $0.49) to IDR 6,900 per liter (+7.8 percent). The price increase was considered necessary as crude oil prices had increased over the past month, while the rupiah continued to depreciate.

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The Indonesian government may raise the price of subsidized gasoline for April 2015 as the Indonesian Crude Price (ICP) rose through February and March from USD $52 per barrel to USD $57 per barrel based on data from the upstream oil & gas regulator SKK Migas. After the Indonesian government drastically reduced fuel subsidy spending at the start of 2015, subsidized gasoline prices are now set each month, in line with price fluctuations on the world market. For subsidized diesel the government provides a fixed IDR 1,000 per liter.

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Bank Dunia menerbitkan laporan terbarunya mengenai Perekonomian Indonesia pada tanggal 18 Maret 2015. Dalam laporan yang berjudul 'High Expectations’ ini Bank Dunia memuji perkembangan reformasi awal di beberapa area kunci seperti subsidi bahan bakar minyak dan juga bertambahnya tindakan-tindakan reformasi kunci yang sedang dalam proses. Ini membangkitkan harapan yang tinggi mengenai perekonomian Indonesia pada jangka waktu menengah maupun panjang. Namun, Pemerintah juga menghadapi halangan-halangan untuk menerapkan reformasi struktural lebih lanjut karena prospek pertumbuhan yang menurun.

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Pada 2 Maret 2015, Badan Pusat Statistik mengumumkan bahwa tingkat inflasi tahunan Indonesia menurun pada bulan Februari. Di bulan Februari, tingkat inflasi tahunan di negara dengan ekonomi terbesar di Asia Tenggara menurun menjadi 6,29% dari 6,96% pada bulan sebelumnya. Hal ini disebabkan karena turunnya harga bahan bakar dan harga bahan makanan (terutama cabai) kendati adanya tekanan inflasi yang dipicu oleh tingginya harga beras. Pada periode antar bulan (month-to-month), Indonesia mencatat deflasi sebesar 0,36% pada bulan Februari, setelah Januari 2015 juga mencatat deflasi bulanan.

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Tingkat inflasi di Indonesia diperkirakan makin menurun pada Februari 2015 karena harga bahan-bahan makanan menurun. Pengecualian ada pada harga beras. Harga beras telah meningkat 30% dibandingkan tahun sebelumnya menjadi Rp 12 ribu per kilogram di bulan Februari. Harga beras yang lebih tinggi disebabkan karena banyaknya halangan dalam operasi-operasi untuk distribusi raskin dikombinasikan dengan musim panen yang terlambat di tahun ini (antara Maret dan Juni). Fluktuasi harga beras, makanan pokok untuk 250 juta penduduk Indonesia, memiliki dampak yang signifikan terhadap tingkat inflasi di Indonesia.

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Based on preliminary data, domestic car sales in Indonesia fell 7.2 percent (y/y) to 96,149 vehicles in January 2015 from the same month in 2014. It is believed that the recent (subsidized) fuel price reforms, implemented by the Joko Widodo administration in November and January (which led to accelerated inflation), have made consumers hesitant to buy a car. Car sales are an important indicator to measure consumer confidence and the general state of the economy. In general, when car sales rise the economy is growing.

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The latest Consumer Confidence Survey released by Indonesia’s central bank indicated that Indonesian consumers were more optimistic in January 2015 (compared to the previous month) on the back of recent fuel price cuts. The index, based on a total of 4,600 households across 18 major Indonesian cities, climbed to 120.2 points in January, up from 116.5 in the preceding month (a score above 100 signals consumer optimism). In December the index had declined due to higher administered fuel prices.

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Menurut data terakhir dari Badan Pusat Statistik (BPS), Indonesia mencatat inflasi bulanan sebesar 0,17% pada bulan Maret 2015. Ini adalah bulan pertama tahun ini Indonesia mencatat inflasi bulanan. Pada bulan Januari dan Februari, Indonesia mengalami deflasi masing-masing 0,24% dan 0,36% pada basis month-to-month (m/m). Inflasi Maret terutama disebabkan karena penyesuaian harga yang diatur: harga yang lebih tinggi dari bensin (oktan rendah), diesel, dan tabung gas elpiji 12 kg. Penyesuaian-penyesuaian ini dibutuhkan karena kenaikan harga minyak dan pelemahan rupiah.

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The Asian Development Bank (ADB) released a report today (24/03) in which it discusses recent economic developments in Indonesia. According to the report, Indonesia’s economic growth is projected to accelerate over the two years ahead provided that the Indonesian government continues to implement structural policy reforms. Such reforms - which include the acceleration of infrastructure development, reduction of logistical costs, and enhancing budget implementation - should lead to an improvement of the investment climate.

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The trade balance of Indonesia improved in 2014. Over the whole year of 2014 Indonesia posted a USD $1.88 billion trade deficit, significantly better than the USD $4.08 billion deficit it recorded a year earlier. Today (02/02), Statistics Indonesia announced that Indonesia posted a USD $0.19 billion trade surplus in the last month of the year after having recorded a USD $0.42 billion trade deficit in the preceding month. The improved performance is mainly due to the country’s growing non-oil & gas surplus and narrowing oil & gas deficit.

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The Indonesian rupiah exchange rate appreciated 0.76 percent to IDR 12,481 per US dollar on Wednesday (21/01) based on the Bloomberg Dollar Index. The performance of the rupiah was in line with most other emerging Asian currencies as Japan’s yen strengthened (against the US dollar) after Japan’s central bank announced to maintain an accommodative monetary policy in an attempt to boost inflation to two percent (y/y). Furthermore, speculation about quantitative easing in Europe boosted attractiveness of riskier Asian assets.

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In his presentation at the Indonesia Investment Summit 2015, organized in Jakarta on 15-16 January, Standard Chartered Bank Senior Economist Fauzi Ichsan said that despite the challenges amid global uncertain times, there remains plenty room and opportunity for Indonesia to grow robustly on the long-term. In fact, by 2030 Ichsan believes that Indonesia will be among the world's top ten countries in terms of largest economies. For investors it is important to understand the challenges and key pillars of economic growth.

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Takehiko Nakao, President of the Asian Development Bank (ADB), estimates that the Indonesian economy will grow 5.6 percent year-on-year (y/y) in 2015, lower than the target that has been set by the Indonesian government in the 2015 State Budget (5.8 percent y/y). Nakao is slightly less optimistic as he expects a slowdown in government spending this year. On a positive note, Nakao’s forecast implies a sharp improvement in Indonesia’s economic growth in 2015 from an estimated 5.1 percentage point (y/y) GDP growth in 2014.

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Moody's Investors Service, a global bond credit rating agency, assigned a definitive rating of Baa3 (stable outlook) to Indonesian government notes maturing in 2025 and 2045 (these notes are issued under the government’s global medium-term note program). Moody’s said in a press release on Tuesday (13/01) that the Baa3 government bond rating is supported by the country’s narrow fiscal deficits, low public indebtedness, healthy economic growth prospects, and the large size of Indonesia’s economy.

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The latest survey of Indonesia’s central bank indicates that consumer confidence fell in December 2014. The central bank’s Consumer Confidence Index fell 3.6 points to 116.5 in the last month of 2014 (a score above 100 signals optimism among consumers) due to the impact of higher subsidized fuel prices implemented in November 2014. This move triggered higher prices of products and services. The central bank’s Consumer Confidence Index is based on interviews with 4,600 households in 18 Indonesian cities.

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Indonesia’s inflation pace accelerated in December 2014, exceeding estimations of analysts and Indonesia’s central bank. December inflation, 2.46 percent (m/m) or 8.36 percent (y/y), accelerated due to the impact of higher subsidized fuel prices (introduced in November) and volatile food prices (fluctuating rice and chili prices at the year-end). Other factors that contributed to high inflation in 2014 were higher electricity tariffs for households and industries, the higher price of 12 kg LPG, and an airfare adjustment.

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Indonesia’s inflation reached 2.46 percent month-to-month (m/m) in December 2014 due to the impact of higher subsidized fuel prices implemented on 18 November 2014. On a year-on-year (y/y) basis, Indonesia’s inflation was recorded at 8.36 percent, slightly lower than the result in 2013 (8.38 percent). Inflation has been high in 2013 and 2014 as the Indonesian government raised prices of subsidized fuels in both years in an attempt to relieve fiscal pressures brought about by costly oil imports.

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