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On Wednesday (05/08/2020) Indonesia Investments released the July 2020 edition of its monthly report. In this edition, titled 'A Modest Rebound', we discuss the impact of the COVID-19 crisis on the Indonesian economy, Indonesia's automotive industry, and a range of other topics.
On Wednesday (03/06/2020) Indonesia Investments released the May 2020 edition of its monthly report. In this edition, titled 'in the Eye of the Storm', we focus specifically on the social implications of the novel coronavirus (COVID-19) crisis on Indonesian society. Hence, unemployment and poverty are two topics that deserve specific attention.
On Tuesday (05/05/2020) Indonesia Investments released the April 2020 edition of its monthly update. In this edition, titled 'Bracing for Impact', we focus on the impact of the novel coronavirus (COVID-19) crisis - and subsequent restrictions on social behavior and business - on the Indonesian economy and Indonesian society.
Statistics Indonesia (BPS) released its Q1-2020 gross domestic product (GDP) data for Indonesia on Tuesday (5 May 2020). According to the agency, the Indonesian economy expanded by 2.97 percent year-on-year (y/y) in the first quarter of 2020. The result is well below forecasts, and considering the real impact of the coronavirus crisis (COVID-19) on the Indonesian economy is to occur in the second quarter, we expect to see a deep red number in Q2-2020 (possibly extending into the following quarter).
On Thursday (08/04/2020) Indonesia Investments released the March 2020 edition of its monthly update. In this edition, titled 'Coronavirus Panic Peaks Worldwide', we obviously focus on the impact of the novel coronavirus (COVID-19) outbreak on the Indonesian economy and Indonesian society.
For the sixth straight month manufacturing activity in Indonesia remained in the red zone. It therefore was a very disappointing second half of 2019. Moreover, it raises room for concern about Indonesia’s overall economic growth in 2019.
For the fifth straight month manufacturing activity in Indonesia remained in the red zone, implying that the fourth – and last – quarter of 2019 is bound to be a disappointing quarter in terms of manufacturing activity (possibly becoming the weakest quarter in four years). And this is certainly not a good omen for Indonesia’s economic growth in Q4-2019.
On Thursday (5/12) Indonesia Investments released the November 2019 edition of its monthly update. The report aims to inform the reader of the key political, economic and social developments that occurred in Indonesia in the month of November 2019 and also touches upon key international developments that made an impact on the Indonesian economy.
The economy of Indonesia expanded by 5.02 percent year-on-year (y/y) in the third quarter of 2019. Although the pace was in line with expectations, it does lead to a more gloomy outlook than we had before.
In early September 2019 the World Bank released a report titled Global Economic Risks and Implications for Indonesia that paints a somewhat negative picture of Indonesia’s economic growth in the foreseeable future. The Washington-based institution noted that it expects Indonesia’s economic expansion to continue slowing up to (at least) 2022; from a realized growth pace of 5.2 percent year-on-year (y/y) in 2018 to 4.6 percent (y/y) in 2022.
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The government of Indonesia suspended all cooperation with US multinational banking and financial services firm JP Morgan Chase after the US bank double downgraded Indonesia from overweight to underweight without elaborating too much on the exact motives behind this drastic move. According to Indonesian government officials this downgrade is excessive and lacks evidentiary support or rational justification. Moreover, they argue this "misleading" downgrade has a big psychological impact on investors and therefore it "disturbs Indonesia's financial stability".
American multinational finance company Goldman Sachs Group Inc believes Indonesia currently has strong enough economic fundamentals to cope with monetary tightening in the USA. Indonesia is in a better position now compared to 2013 when the taper tantrum (the winding down of the US Federal Reserve's quantitative easing program) led to massive capital outflows from emerging markets (and Indonesia was among the biggest victims with the rupiah weakening more than 25 percent against the US dollar in 2013).
The year 2016 was a good one in terms of foreign investment in Jakarta's residential property sector even though Indonesia's property market remained sluggish. Various foreign property developers - including China's state-owned China Communications Construction Group (CCCG), Japanese firms Mitsubishi Corporation and Tokyu Land Corporation as well as Hong Kong's HongKong Land and Malaysia's Sime Darby Group - announced to engage in big property projects (in and around the capital city of Jakarta) that have a combined value of USD $2.8 billion.
Global credit rating agency Fitch Ratings affirmed Indonesia's long-term foreign- and local-currency issuer default ratings at 'BBB-' but revised the outlook from 'stable' to 'positive'. The improvement is primarily attributed to Indonesia's low government debt burden and favorable economic growth outlook, while structural reforms (the government's economic policy packages that have been launched since September 2015 as well as the tax amnesty program) are gradually improving the nation's business and investment climate.
Throughout the year 2016 the economy of Indonesia was plagued by major challenges stemming from abroad. In fact, most countries around the globe have been busy to soften the impact of low global economic growth on the local economy. In the case of Indonesia, authorities have unveiled a series of 14 economic policy packages aimed at improving investment, trade and purchasing power. Although it remains difficult to implement these packages in full force (due to the low quality of human resources at the local government level or conflicts of interests), they have helped to push Indonesia's economic growth into higher gear.
An International Monetary Fund (IMF) team, led by Luis E. Breuer, visited Indonesia between 7 and 18 November 2016 to conduct the annual Article IV Consultation. The IMF team exchanged views with Indonesian government officials, Indonesia's central bank (Bank Indonesia), and other public agencies, as well as representatives of the private sector, academics, and students on recent economic and financial market developments and the near-to-medium-term economic outlook.
Bank Indonesia (BI) is the central bank of the Republic of Indonesia, and was known as "De Javasche bank" or "The Java Bank" in the colonial period. Bank Indonesia was founded on 1 July 1953 from the nationalization of De Javasche Bank. As an independent state institution, Bank Indonesia is fully autonomous in formulating and implementing each of its assumed tasks and most policy goals tend to center around the ability to stabilize prices in the economy.
After two years in office, the time is ripe now to take a look at the performance and accomplishments of the government under the leadership of Joko Widodo, often called Jokowi. Indonesia's seventh president was a bit unlucky. In the first year of his rule, commodity prices were at multi-year lows (curbing Indonesia's foreign exchange earnings) amid sluggish global economic growth, while capital outflows from Indonesia occurred on the back of monetary tightening in the USA, sending the rupiah to a 17-year low in September 2015.
The central bank of Indonesia (Bank Indonesia) has become slightly less optimistic about Indonesia's economic growth in the third quarter of 2016. Bank Indonesia revised down its growth projection to below the 5 percent (y/y) mark for Q3-2016 (from an earlier forecast of 5.2 percent). However, the lender of last resort still expects to see a better performance compared to the 4.73 percent (y/y) pace posted in Q3-2015. Meanwhile, low inflation and a strong rupiah could result in another interest rate cut in Southeast Asia's largest economy.
In line with the performance of most stocks in Asia, Indonesia's benchmark Jakarta Composite Index plunged 1.66 percent to 5,281.92 points on Friday (09/09). Several matters brought negative market sentiments to Asia: the European Central Bank (ECB) seems unwilling to boost asset purchases, North Korea conducted its fifth nuclear test, while Indonesia's central bank announced that the nation's retail sales expanded at a slower pace in July 2016. Meanwhile, the Indonesian rupiah depreciated 0.34 percent to IDR 13,108 per US dollar (Bloomberg Dollar Index).
