For a number of years in a row, Indonesia's IHSG (the country's index of all listed stocks and thus the main indicator of the Indonesia Stock Exchange) has reported double-digit growth. This year so far, the IHSG has grown 12.28 percent and is most likely set to continue its record breaking path as it has done throughout the year (particularly if the country's exports will be back on track). But there are a few issues that put a burden on the index. These issues include inflation, a trade deficit, the weak rupiah and concerns about a property bubble.

Below is a table that indicates the performances of the IHSG and a number of selected thematic indices from this year's first trading day up to 1 April. The table also shows performance figures for the period 1 April to 10 April. The first of April 2013 is taken as a boundary because on that day the government released its March inflation figure as well as February's export & import figures.

Index  2 Jan. - 1 April 
 1 April - 10 April
IHSG        13.62%          -1.24%
Financials        21.72%          -2.08%
Real Estate        43.06%             -1.51%
Infrastructure        12.72%           1.38%
Market Cap        15.72%          -0.61%
Commodities         -8.33%          -0.17%

There is a large discrepancy visible in the two periods above. Of course, these indices are not only influenced by internal factors but also by external ones outside Indonesia. However, the two worst performers in the table - financials and real estate - do seem to be affected by the country's internal context. During the period from 2 January to 1 April, both financials and real estate outperformed the main index (IHSG) as well as other thematic indices significantly. However, in the second period, we see the opposite happening.

Indonesia's economy experienced a small dip in early April. The inflation figure of March (0.63 percent) was the highest March inflation rate in the last five years. In fact, Indonesia normally experiences deflation in March. The country's annual headline inflation rate went up to 5.90 percent and threatens to fall outside the Central Bank's target range. Moreover, a possible cut in fuel subsidies (which is hotly debated in the Indonesian press) will provide ample upward pressure on this current inflation figure. High inflation can be an incentive for Indonesia's Central Bank to raise the benchmark interest rate and subsequently burden the real estate or property sector as people prefer to borrow money at lower interest rates to purchase real estate. As such, it also impacts heavily on the financial sector (particularly banking). These concerns have resulted in a temporary correction of both indices as investors sold part of their financials and real estate portfolios. A decline in value of financials impacts heavily on the IHSG as the former accounts for about 25 percent of the IHSG's value.

Indonesia's higher inflation in combination with its widening trade deficit have been putting pressures on the performance of the IDR rupiah as can be seen from the weakening trend of the rupiah against the US dollar. This trend has been in progress for a while. Last year, the rupiah weakened 6.16 percent against the dollar. This year, the rupiah's decline has been limited (0.85 percent) but at the expense of the central bank's foreign exchange reserves, which declined from USD $112.8 billion in late 2012 to USD $104.8 billion currently.

Lastly, Indonesia's real estate sector has recorded such a robust growth since early 2013 that people start to wonder whether there might be a bubble rising. With GDP per capita rising significantly, Indonesians have been increasingly purchasing real estate in recent years. This has resulted in a property boom that gave rise to many new real estate projects, and many more in the pipeline. The topic of this possible or potential real estate bubble is mentioned in Indonesian media on a daily basis but analysts argue that there is no bubble emerging at this stage as prices are still relatively low and buyers of the property are mostly end-users.

As such, it is believed that the dip in financials and real estate as outlined above is only temporary and both still contain ample room for growth towards the future if accompanied by conducive government policies.