Inflation in Indonesia is expected to have eased to 7.50 percent year-on-year (y/y) in January 2015 on the back of cheaper domestic fuel prices (triggered by sliding global oil prices). The month-on-month pace (m/m) in the first month of 2015 may have tumbled to near zero percent from 2.46 percent (m/m) in December 2014. Last year, Indonesian inflation had accelerated to 8.36 percent (y/y) primarily due to the implementation of higher prices for government administered low-octane gasoline and diesel in November 2014.

Lanjut baca ›

Emeritus Professor Dorodjatun Kuntjoro-Jakti, the former Coordinating Minister for Economic Affairs in Megawati Sukarnoputri’s Cabinet (2001-2004), is pessimistic that Indonesia can achieve its 5.8 percent (y/y) economic growth target in 2015. According to Kuntjoro-Jakti, Southeast Asia’s largest economy will feel the impact of the two current global challenges: falling commodity prices (limiting Indonesia’s foreign exchange earnings) and the strong US dollar (triggered by US monetary tightening).

Lanjut baca ›

The current account deficit of Indonesia, which is expected to have improved slightly from 3.3 percent of the country’s gross domestic product (GDP) in 2013 to about 3 percent of GDP in 2014, is forecast to continue to improve in 2015 hence placing less pressures on the rupiah exchange rate and the economy in general. A wide current account deficit makes the country vulnerable to capital outflows in times of global shocks (for example looming higher US interest rates) as the deficit signals that Indonesia relies on foreign funding.

Lanjut baca ›

Due to sharply fallen global crude oil prices the Indonesian government announced on Friday (16/01) that prices of fuels (low-octane gasoline and diesel) will be cut by an average of 14 percent, effective from Monday (19/01). The price of gasoline will drop 13 percent to IDR 6,600 (USD $0.53) per liter and diesel by 15 percent to IDR 6,400 (USD $0.51) per liter. Lastly, the government also reduced the price of Pertamina’s liquefied petroleum gas (LPG) by 4.2 percent to IDR 129,000 per 12-kilogram-cannister.

Lanjut baca ›

The central bank of Indonesia (Bank Indonesia) decided to keep its benchmark interest rate (BI rate) at 7.75 percent at its Board of Governors’ Meeting on Thursday (15/01). The country’s Lending Facility and Deposit Facility were maintained at 8.00 percent and 5.75 percent, respectively. According to the bank this interest rate environment is sufficient to push inflation, which has accelerated to 8.36 percent year-on-year (y/y) in December due to fuel subsidy reforms, back towards its target of 3 to 5 percent (y/y) in 2015.

Lanjut baca ›

Indonesia’s Chief Economics Minister Sofyan Djalil said that Indonesia will further reduce prices of low-octane gasoline and subsidized diesel at the end of this month as global oil prices continue to fall (touching five-year lows). On 1 January 2015, the Indonesian government had already removed subsidy for widely-used low-octane gasoline (premium), while a fixed subsidy scheme was introduced for diesel (solar) meaning that the government now provides a subsidy of IDR 1,000 (USD $0.08) per liter of diesel.

Lanjut baca ›

The Indonesian government has further reformed its decade-old fuel subsidy policy in a move to streamline - and make more structural use of - public spending. The latest change is effective from today (1 January 2015) and thus Indonesia moved a step closer to applying a market-based price mechanism. The government now uses a fixed diesel subsidy of IDR 1,000 (USD $0.08) per liter, while subsidy for low-octane gasoline is scrapped altogether (however the government will account for gasoline distribution costs outside Java, Madura and Bali).

Lanjut baca ›

The trade balance of Indonesia is expected to show another deficit in November 2014 as oil and gas imports in combination with weak commodity exports continue to plague the balance. However, Executive Director at the Economic and Monetary Policy Department of Indonesia’s central bank (Bank Indonesia) Juda Agung said that the deficit will most likely turn into a surplus soon. Still, another monthly trade deficit implies that the country’s wide current account deficit has few chances to improve markedly at the year-end.

Lanjut baca ›

Troubles continued on Tuesday (16/12) for emerging markets. Currencies and stocks in the Asia-Pacific were mostly down amid a significant interest rate hike by Russia’s central bank, falling oil prices, and expected weakening of China’s manufacturing activity. Indonesian stocks were down 1.81 percent to 5,014.53 points by 11:20 am local Jakarta time, while the rupiah had depreciated 0.88 percent to 12,825 per US dollar by the same time according to the Bloomberg Dollar Index.

Lanjut baca ›

Indonesia’s central bank decided to keep its benchmark interest rate (BI rate) at 7.75 percent at Thursday’s Board of Governors’ Meeting (11/12). The Lending Facility and Deposit Facility were kept at 8.00 percent and 5.75 percent, respectively. The central bank is convinced that the current interest rate levels are effective to combat short-term inflationary pressures (triggered by the implementation of higher subsidized fuel prices in mid-November) pushing it back to the target corridor of between 3 and 4 percent (y/y) in 2015.

Lanjut baca ›

According to Fauzi Ichsan, Managing Director at Bank Standard Chartered Indonesia, there is a possibility that Indonesia's central bank (Bank Indonesia) will raise its benchmark interest rate (BI rate) from 7.50 percent to 8 percent at the next Board of Governor's Meeting as the country's current account deficit has not improved markedly yet. The deficit stood at about 3.5 percent of the country's gross domestic product (GDP) at the end of 2013. Bank Indonesia intends to lower the deficit to a sustainable level of below 3 percent in 2014.

Lanjut baca ›

According to Indonesia's Finance Minister Chatib Basri, the country's trade deficit will continue between 2014 and 2016 (although expecting to show an easing trend) but will turn into a surplus from 2017 onwards. One of the most influential factors that will impact on the trade balance is Indonesia's raw ore export ban, in effect as of Sunday 12 January 2014. In the short term, this ban will limit Indonesia's exports but in the long term, from 2017 onward, it will lead to high added-value exports.

Lanjut baca ›

ICRA Indonesia, an independent credit rating agency and subsidiary of ICRA Ltd. (associate of Moody's Investors Service), publishes a monthly newsletter which provides an update on the financial and economic developments in Indonesia of the last month. In the December 2013 edition, a number of important topics that are monitored include Indonesia's inflation rate, the trade balance, the current account deficit, the IDR rupiah exchange rate, and gross domestic product (GDP) growth. Below is an excerpt of the newsletter:

Lanjut baca ›

Today, Bank Indonesia kept its benchmark interest rate (BI rate) at 7.50 percent at the Board of Governors’ meeting. The lending facility rate and deposit facility rate were maintained at 7.50 percent and 5.75 percent respectively. An assessment of the economy in 2013 and outlook for 2014-2015 indicated that such policy is consistent with ongoing efforts to keep inflation within the target of 4.5±1 percent in 2014 and 4±1 percent in 2015, as well as to help reduce the current account deficit to a sustainable level.

Lanjut baca ›

Indonesia's ban on the export of unprocessed minerals, which is scheduled to take effect on 12 January 2014, is expected to lead to a temporary slowdown of Indonesia's total exports and thus will put more pressure on the country's current account deficit. Despite two consecutive months with trade surpluses (October and November 2013), Indonesia's wide current account deficit is still a concern to investors as well as the government although the deficit has shown an easing trend in recent quarters.

Lanjut baca ›

Again positive news for Indonesia's trade balance. Last week, Statistics Indonesia announced that the largest economy of Southeast Asia posted a USD $776.8 million trade surplus in November 2013 (the largest monthly trade surplus since March 2012). After the (revised) USD $24 million trade surplus in October 2013, November was the second straight month in which the country posted a surplus. This development is important to gain investors' confidence as Indonesia's current account deficit has been a major cause for concern.

Lanjut baca ›

As we approach the end of 2013 it is worth taking a look back to the performance of the stock market of Indonesia this year. At the start of the year, investors and analysts were positive that the country's benchmark stock index (known as the IHSG or Jakarta Composite Index) would post steady growth. Initial forecasts claimed that the IHSG could surpass the 5,000 points level by the end of 2013 from 4,300 at end-2012. The actual performance of the IHSG in fact exceeded expectations as in May 2013 the index moved beyond 5,200 points.

Lanjut baca ›

The Indonesia rupiah exchange rate continued its downward trend on Wednesday (18/12). Both Bank Indonesia's Jakarta Interbank Spot Dollar Rate (JISDOR) and Bloomberg Dollar Index indicated a depreciating rupiah against the US dollar. Bank Indonesia's JISDOR was set at IDR 12,151 per US dollar, a 0.39 percent fall from yesterday (17/12), while in the Bloomberg Dollar Index the currency depreciated 0.35 percent to IDR 12,168 per US dollar at 16:55 in the afternoon, local Jakarta time.

Lanjut baca ›

On Thursday 12 December 2013, Indonesia's central bank (Bank Indonesia) announced that the country's benchmark interest rate (BI rate) remains unchanged at the level of 7.50 percent in December 2013. This announcement was a bit surprizing as about 80 percent of analysts expected Bank Indonesia to raise the BI rate in order to support the depreciating Indonesia rupiah exchange rate. Starting the year at IDR 9,670 per US dollar, the rupiah has fallen around 25 percent to IDR 12,081 per US dollar.

Lanjut baca ›

The central bank of Indonesia (Bank Indonesia) estimates that Indonesia's current account deficit will ease to 3.5 percent of the country's gross domestic product (GDP) by the end of 2013. Indonesia's wide current account deficit has been one of the major financial troubles this year and managed to weaken investors' confidence in Southeast Asia's largest economy. Thus, Indonesia became one of the hardest hit emerging countries after the Federal Reserve started to speculate about an ending to its quantitative easing program.

Lanjut baca ›