A senior official at Indonesia's central bank (Bank Indonesia) stated that the country's current account deficit is expected to ease to 2.5 - 2.7 percent of Indonesia's gross domestic product (GDP) by 2014. In the second quarter of 2013, the account deficit reached USD $9.8 billion or 4.4 percent of GDP in Q2-2013, an alarmingly high figure that has caused much concern among the investor community. This deficit is particularly brought on by a large deficit in the country's oil & gas sector in combination with strong domestic demand for imports.

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Indonesia’s economy continues to adjust, as weaker commodity prices, tighter international financing, and slowing domestic demand moderate the growth rate to 5.6 percent for 2013. This downward revision is discussed in the latest edition of the World Bank’s Indonesia Economic Quarterly (IEQ). Further moderation of growth (at 5.3 percent) may be expected in 2014, with growth in high income economies firming but international market conditions likely remaining volatile.

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An updated profile of Bank Mandiri is presented in our Indonesian Companies' section. Bank Mandiri, which is Indonesia’s largest financial institution by assets, offers businesses and individuals throughout Indonesia a full set of banking and non-banking products and services. The bank was established as a result of the Asian Financial Crisis when four state-owned banks (Bank Exim, Bank Bumi Daya, Bank Dagang Negara and Bapindo) were merged into Bank Mandiri as part of the government's bank restructuring program.

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Contrary to what most analysts expected, Indonesia experienced deflation of 0.35 percent in September 2013. The figure was released today (01/10) by Statistics Indonesia. Deflation was particularly triggered by easing food prices (including onions, peppers, beef, fresh fish and carrot) and lower tariffs for air and train transportation as well as inter-city transport fares. Previously, it was expected that Indonesia would record low inflation (less than 1 percent) in September. Year-on-year inflation eased to 8.40 percent (from 8.79 in August).

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Singapore-based DBS Group, a leading financial services group in Asia, expects Indonesia's gross domestic product (GDP) growth to reach 5.8 percent in 2013, while it forecasts growth of 6.0 percent in 2014. This year, Indonesia has to cope with ups and downs due to several domestic and foreign factors. According to the institution, two issues stand out as being significantly influential this year. These are the government's decision to increase prices of subsidized fuels in late June and the country's sharply depreciating rupiah.

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The central bank of Indonesia (Bank Indonesia) has raised its benchmark interest rate (BI rate) and deposit facility rate (Fasbi) by 25 basis points to 7.25 percent and 5.50 percent respectively on Thursday (12/09). It is the fourth time since June that Bank Indonesia raised the interest rate. Previously, it maintained a historic low BI rate of 5.75 percent for 16 months. The increase is one of the measures taken to control inflation, stabilize the rupiah exchange rate and to ensure that the current account deficit is managed to a sustainable level.

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The International Monetary Fund (IMF) expects the economy of Indonesia to expand by 5.25 percent in 2013, which is considerably lower than the IMF's earlier forecast. In its World Economic Outlook, released in April 2013, the institution set economic growth of Indonesia at 6.3 percent. However, after emerging markets were hit by large capital outflows when the Federal Reserve began to speculate about an end to its quantitative easing program (QE3), Indonesia's GDP growth assumptions were quickly revised downwards.

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Indonesia's inflation rate in August 2013 was 1.12 percent (month to month) according to Statistics Indonesia (BPS). This result is rather positive as many analysts projected a higher outcome for August inflation. Last month (July), inflation accelerated by 3.29 percent as the impact of higher subsidized fuel prices was felt in combination with weak government policies regarding food quotas, Muslim celebrations (Ramadan and Idul Fitri) as well as the beginning of the news school year.

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Apart from Indonesia's current account deficit, another indicator that is closely watched by the investor community is the country's inflation rate. After subsidized fuel prices were raised in late-June, inflation soared to 8.61 percent in July (YoY), weakening people's purchasing power (as domestic consumption accounts for about 55 percent of economic growth), thus eroding economic growth, investments and the currency. On Monday (02/09), Statistics Indonesia will release the official August inflation rate.

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Indonesia's central bank (Bank Indonesia) decided to raise its benchmark interest rate (BI rate) by 50 basis points to 7.0 percent on Thursday (29/08) in order to support the weakening rupiah amid slowing global economic growth. The rupiah has been on a long losing streak and has fallen to its lowest level against the US dollar in four years. The BI rate had already been raised in June and July from a historically low 5.75 percent to 6.50 percent. Today, an extra meeting was scheduled to discuss policy measures.

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During Bank Indonesia’s Board of Governors it was decided on 18th August 2015 to hold the BI Rate at 7.50 percent, while maintaining the Deposit Facility rate at 5.50 percent and the Lending Facility rate at 8.00 percent. The decision is consonant with efforts to control inflation within the target corridor of 4±1 percent in 2015 and 2016. In the short term, Bank Indonesia (BI) is focused on efforts to stabilize the rupiah amid uncertainty in the global economy, by optimizing monetary operations in the rupiah and the foreign exchange market.

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The central bank of Indonesia (Bank Indonesia) predicts mounting inflationary pressures in the months June and July due to the Ramadan and Idul Fitri festivities, the possible impact of the El Nino weather phenomenon, and the new school year. Bank Indonesia expects to see inflation at 0.66 percent month-to-month (m/m) in June 2015, particularly driven by volatile food prices (a normal phenomenon ahead of Idul Fitri). On a year-on-year (y/y) basis, Indonesian inflation is expected to accelerate to 7.40 percent, from 7.15 percent in May.

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Most stock markets and currencies in Southeast Asia weakened on Friday (29/05), including Indonesia’s benchmark Jakarta Composite Index and the rupiah. The Jakarta Composite Index fell 0.40 percent to 5,216.38 points, while the rupiah depreciated 0.01 percent to IDR 13,224 per US dollar according to the Bloomberg Dollar Index. Over the past week, Indonesian stocks and the rupiah weakened primarily due to the Greek debt crisis, looming higher US interest rates and the lack of positive domestic factors.

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Investors are clearly waiting for results of Bank Indonesia’s Board of Governor’s Meeting, conducted today (19/05). In this monthly policy meeting, Indonesia’s central bank will decide on its monetary approach. For most market participants it is of crucial importance to learn whether Bank Indonesia will adjust its interest rate policy in order to support the country’s economic growth (which slowed to a five-year low in the first quarter of 2015). Ahead of results, scheduled to be released this afternoon, Indonesian stocks and the rupiah weaken.

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Statistics Indonesia (BPS) announced on Monday morning (04/05) that Indonesia’s inflation accelerated to 6.79 percent year-on-year (y/y) in April 2015. On a month-to-month basis, Indonesian inflation was recorded at 0.36 percent in April. Although this result is in line with analysts’ previous projections, April inflation realization is in sharp contrast with the ‘usual’ inflation pace in the fourth month of the year. Usually, Indonesia records slight deflation in April as prices ease amid the peak of the harvest season.

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Inflation in Indonesia is expected to accelerate to 6.80 percent year-on-year (y/y) in April 2015, from 6.38 percent y/y in the previous month, according to the central bank of Indonesia (Bank Indonesia). As global oil prices have somewhat recovered from their recent lows, they add inflationary pressures in Indonesia (higher transportation costs). On a month-on-month (m/m) basis, Indonesian inflation is expected to be around 0.35 percent in April. This figure would be in sharp contrast to ‘normal’ April inflation.

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Indonesia’s central bank (Bank Indonesia) decided to maintain its benchmark interest rate (BI rate) at 7.50 percent, the deposit facility rate at 5.50 percent and lending facility rate at 8.00 percent. This interest rate environment is considered to be in line with the central bank’s ongoing efforts to push the country’s inflation figure within its target of 4±1 percent for 2015 and 2016, as well as to control the country’s current account deficit towards a healthier level at 2.5-3 percent of gross domestic product (GDP) in the medium term.

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According to the latest data from Statistics Indonesia (BPS), Indonesia recorded monthly inflation of 0.17 percent in March 2015. It was the first month this year in which Indonesia recorded inflation. In January and February Indonesia experienced deflation of 0.24 percent (m/m) and 0.36 (m/m), respectively. March inflation was primarily the result of administered price adjustments: higher prices of (low-octane) gasoline, diesel and 12-kg LPG canisters. These adjustments were necessary amid rising oil prices and rupiah depreciation.

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Indonesia’s central bank (Bank Indonesia) decided to hold the country’s key interest rate (BI rate) at 7.50 percent, the deposit facility rate at 5.50 percent, and the lending facility rate at 8.00 percent at the Board of Governor’s Meeting conducted on Tuesday 17 March 2015. Bank Indonesia said that its decision is in line with its ongoing efforts to push inflation back to the target range of 4±1 percent for both 2015 and 2016, and to guide the country’s current account deficit towards a healthier level at 2.5-3 percent of GDP in the medium term.

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Indonesia’s consumer price index fell for the second consecutive month in February 2015, recording deflation of 0.36 percent month-on-month (m/m) in February, while on an annual basis Indonesian inflation eased to 6.29 percent (y/y), down from 6.96 percent (y/y) in the preceding month. Inflationary pressures declined primarily on the back of lower prices of chili peppers and fuel. Easing inflation in Southeast Asia’s largest economy may provide room for Indonesia’s central bank (Bank Indonesia) to cut interest rates further this year.

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