Bank Indonesia Governor Agus Martowardojo expects that inflation in July 2014 will be under control. However, there are several factors that trigger inflationary pressures. These include the holy Islamic fasting month Ramadan and subsequent Idul Fitri celebrations at the month-end, as well as higher electricity tariffs and the start of the new school season (inflation in July is traditionally higher than in other months due to seasonal factors). Martowardojo still believes that the year-end inflation target 3.5 to 5.5 percent can be achieved.

Read more ›

The central bank of Indonesia (Bank Indonesia) decided to keep its benchmark interest rate (BI rate) at 7.50 percent at today’s Board of Governor’s meeting. The lending facility as well as deposit facility were maintained at 7.50 and 5.75 percent, respectively. The central bank believes that the current interest rate environment is able to push the inflation figure back to its target range of between 3.5 and 5.5 percent by the year-end. Earlier this month, Statistics Indonesia announced that inflation has eased to 6.70 percent (year-on-year) in June 2014.

Read more ›

According to data from the Indonesian Automotive Industry Association (Gaikindo), domestic car sales in Indonesia rose 13 percent to 109,706 car units in June 2014 from the previous month (97,147 vehicles) as people increased car purchases ahead of the Idul Fitri (Lebaran) festivities, which commence after the holy fasting month of Ramadan has ended on 28 July. Idul Fitri involves the exodus of millions of Indonesians from the cities to their places of origin. Ahead of this celebration, car sales always increase.

Read more ›

Ahead of the release of the Indonesian government’s official June consumer confidence report (expected to be released today), a survey conducted by the Danareksa Research Institute shows that Indonesian consumer confidence may have weakened 0.3 percent to 94.8 points in June 2014 amid concern about job availability and an expected slowdown in economic growth of Indonesia for the six months ahead. A reading below 100 points indicates pessimism, while a reading above 100 points indicates optimism.

Read more ›

On Tuesday morning (01/07), Chief Statistician at Statistics Indonesia (BPS) Dr. Suryamin announced that inflation rose 0.43 percent (month-on-month) in June 2014. The foodstuff component provided highest inflationary pressures in the past month. On a year-on-year basis, headline inflation eased to 6.70 percent from 7.32 percent in May 2014. Calender year inflation (up to June 2014) rose to 1.99 percent. Later today, Indonesia Investments will publish an analysis of June inflation.

Read more ›

Indonesian Finance Minister Chatib Basri estimates that the trade balance of Indonesia may post an USD $500 million surplus in May 2014 amid improved performance of the country’s crude palm oil (CPO) exports, both in terms of price and volume (crude palm oil being one of the most important foreign exchange earners of Indonesia). Concern about Indonesia’s trade balance (and current account balance) had returned after Indonesia recorded an USD $1.96 billion deficit in the previous month.

Read more ›

The central bank of Indonesia (Bank Indonesia) expects to see a trade surplus in May 2014. Governor of Bank Indonesia Agus Martowardojo stated that he is optimistic that Indonesia’s trade balance will show positive growth after recording a shocking deficit of USD $1.96 billion in April 2014. This deficit was mainly the result of weak global demand for crude palm oil and coal, both of which are Indonesia’s most important foreign exchange earners in the non-oil & gas sector. However, this global demand is expected to have remained weak in May.

Read more ›

Indonesian Finance Minister Chatib Basri expects that the higher electricity tariffs which may be introduced per 1 July 2014 (for 400-950 watt capacity) will have a relatively small impact on the pace of inflation in Southeast Asia’s largest economy. “If introduced, the higher electricity price may add 0.1 or 0.2 percentage point to inflation. The limited impact of this price hike on Indonesian inflation means that the government will not revise its inflation target for 2014 yet,” Basri said. The Indonesian government targets an inflation growth rate of 5.3 to 5.5 percent.

Read more ›

According to Bank Indonesia's consumer confidence survey, Indonesian consumers were more optimistic in May 2014 compared to the previous month. Consumer confidence in Southeast Asia's largest economy increased to 116.90 in May 2014 from 113.90 in April. The increase indicates that Indonesian consumers are more optimistic about the current condition of the Indonesian economy as well as conditions in the coming six months. The result in May 2014 was also higher than in the same month in 2013 (112.8).

Read more ›

On 31 May 2014, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve economic topics such as the construction of the world's largest geothermal power plant, forecasts for May inflation and April trade statistics, an update on the ceramic industry as well as on the rupiah and Indonesian stocks.

Read more ›

Indonesia's October inflation rate was well-received by investors. On Friday (01/11), Statistics Indonesia (BPS) announced that the country's inflation in October 2013 grew 0.09 percent. Easing inflation was mainly due to falling prices of raw foods and clothes. Year-on-year (yoy), however, Indonesia's inflation is still high at 8.32 percent, although showing a moderating trend from 8.40 percent (yoy) in September 2013 and 8.79 percent (yoy) in August 2013. Inflation had skyrocketed after subsidized fuel prices were raised by an average 33 percent in June.

Read more ›

Forecasts for Indonesia’s gross domestic product (GDP) growth in 2013 and beyond have been revised down by all institutions, including the Indonesian government and central bank as well as international organizations such as the World Bank and the International Monetary Fund (IMF). Initially, the country’s economic growth was expected to reach around 6.5 percent in 2013. However, most institutions have downgraded forecasts for the country’s economic growth to below the 6.0 percent mark.

Read more ›

The benchmark stock index of Indonesia (IHSG) was down 0.61 percent to 4,492.26 on its first trading day after the Idul Adha celebrations (when Muslims remember that Abraham was willing to sacrifice his son to God). The main reason why the IHSG was down on Wednesday (16/10) was due to continued uncertainty about the US debt ceiling issue, while the deadline (17/10) is closing in. Fitch Ratings put US Treasury bonds on Rating Watch Negative, which might be a first step before a downgrade.

Read more ›

According to the Indonesian Cement Association (ASI), cement sales in Indonesia reached 41.6 million tons in the first three quarters of 2013, a 5.3 percent increase compared to domestic cement sales in the same period in 2012 (39.5 million tons), while Indonesia's cement exports jumped by 187 percent to 503 thousand tons. As such, total cement sales from January to September 2013 grew 6.2 percent to 42 million tons. Meanwhile, Semen Indonesia, Indonesia's largest cement producer, managed to expand its market share.

Read more ›

Bank Indonesia’s Board of Governors decided to hold the BI Rate at a level of 7.25 percent, with rates on the Lending Facility and Deposit Facility held respectively at 7.25 percent and 5.50 percent. Bank Indonesia will continue to monitor global and domestic developments and further synergise the monetary and macroprudential policy mix in order to ensure that inflationary pressures remain under control, that rupiah exchange rate stability is maintained according to its fundamentals and the current account deficit is reduced to a sustainable level.

Read more ›

The Consumer Confidence Index of Indonesia rose 0.9 percent in September 2013 after having fallen 8.4 percent in the previous month. In September, the index rose because Indonesian consumers are more confident about prospects of the Indonesian economy, while concerns about the increase of certain food prices eased. Purbaya Yudhi Sadewa, chief economist at the Danareksa Research Insititute, said that in September 77.4 percent of consumers were concerned about rising food prices, down from 82.5 percent in August.

Read more ›

Growth rates in Indonesia in 2013 and 2014 will fall below earlier projections, highlighting the need to continue improving the country’s competitiveness in manufactured exports, says the Asian Development Bank (ADB) in an update of its flagship annual economic publication, Asian Development Outlook 2013. ADB revised down its 2013 gross domestic product (GDP) growth forecast for Indonesia to 5.7% from 6.4% seen in April. For 2014, growth will also be adjusted to 6.0% from the previous estimate of 6.6%.

Read more ›

It seems clear now how market conditions will be until the end of the year. Two important foreign issues - the US Federal Reserve's tapering of quantitative easing (QE3) as well as the US debt ceiling issue which resulted in a shutdown as the Democrats and Republicans failed to come to an agreement on the country's federal budget - and various economic data from Indonesia (inflation and the trade balance) have provided some more insight into the matter. I will discuss each topic one by one below.

Read more ›

After three months of high monthly inflation rates, Indonesia's inflation eased in September due to falling prices of food, transportation, communications and financial services after the Muslim celebrations of Idul Fitri, which always cause a spike in inflation, have passed. In September 2013, Indonesia posted deflation of 0.35 percent. It was the first time in 12 years that the country posted deflation in this month. The annual inflation rate eased to 8.40 percent from 8.79 percent in August 2013.

Read more ›

Inflationary pressures eased in September 2013 to a 0.35% rate of deflation (mtm), or 8.40% (yoy). The rate of deflation exceeded the projections contained within the Price Monitoring Survey conducted by Bank Indonesia and much lower than inflation expectations by some analysts. Abundant supply in the wake of horticultural harvests (shallots and chilli peppers), triggered a deep correction in food prices. In addition, sliding beef prices also exacerbated further deflationary pressures, with volatile foods recording deflation of 3.38% (mtm).

Read more ›