The report of Morgan Stanley was released today.

The World Bank downgraded its forecast for Indonesia's economic growth in 2013 to 5.9 percent from its previous estimate of 6.2 percent as higher inflation (due to the increase in prices of subsidized fuels) will result in reduced domestic consumption and is likely to make Indonesia's central bank to boost borrowing costs. Moreover, the World Bank signals a cooling in exports and investment growth. Lastly, it sees risks of capital outflows from the country's capital markets as the Federal Reserve intends to stop its quantitative easing program in 2014.

Today, Bloomberg reported that Indonesian brokerage CIMB Securities Indonesia also cut its recommendation on the nation’s stocks due to inflation concerns. So far in 2013, foreign investors sold about USD $210 million worth of Indonesian shares. In the past seven years, foreigners bought a net USD $16 billion of Indonesian shares. The brokerage lowered its recommendation on Indonesian stocks to neutral from overweight on 2 July 2013 and cut the year-end target for Indonesia's main stock index (IHSG) to 5,075 from 5,250.