Indonesian Finance Minister Chatib Basri said that the country's current account deficit, the broadest measure of international transactions, may widen in the second quarter of 2014 as many local companies engage in business expansion. Such expansion usually triggers an increased amount of imports, thus impacting on the trade balance. A widening current account deficit in the second quarter of the year is a normal trend. The balance usually improves in the third and fourth quarters.

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The non-oil & gas industry of Indonesia grew 5.56 percent in the first quarter of 2014. Although general economic growth in Southeast Asia's largest economy has slowed to 5.21 percent in the first quarter, several industries such as the Food and Beverage Processing Industry, the Transportation Equipment Industry, Machinery & Equipment Industry, as well as Farming & Plantation-based Industries post strong growth. The Indonesian Industry Ministry targets a 6.5 percentage rate for the country's industrial sector in 2014.

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One day after the official announcement that two pairs will compete in the presidential election (9 July 2014), the benchmark stock index of Indonesia (Jakarta Composite Index or IHSG) and the Indonesian rupiah exchange rate are still in a state of decline. Although yesterday (19/05) the rupiah and IHSG strengthened considerably prior and shortly after Joko "Jokowi" Widodo declared that Jusuf Kalla would be his running mate (the vice-presidential candidate) in the election, markets have been selling Indonesian assets since Monday afternoon.

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In front of the Joang '45 Museum, which illustrates Indonesia's battle for independence, Joko "Jokowi" Widodo (Governor of Jakarta) officially declared that Jusuf Kalla is his running mate (or the vice-presidential candidate) in the upcoming presidential election (scheduled for 9 July 2014). It had been speculated for weeks that Jusuf Kalla (former Indonesian Vice-President, businessman and philanthropist), would be Jokowi's running mate but it was only officially declared just after noon (local Jakarta time) on Monday (19/05).

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Although we are still waiting for the official announcement (which is expected to follow shortly), more and more signs are pointing towards the nomination of Jusuf Kalla as the running mate (or vice-presidential candidate) of Jakarta Governor Joko "Jokowi" Widodo in the presidential election that is scheduled for 9 July 2014. The pair will have the full support of the PDI-P, NasDem, PKB and Hanura coalition. The chairmen of the NasDem (Surya Paloh) and PKB (Muhaimin Iskandar) have reportedly confirmed that Kalla will be the running mate.

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Both the Indonesian rupiah exchange rate and the country's benchmark stock index (known as the Jakarta Composite Index or IHSG) have strengthened significantly on Wednesday's trading day (14/05). The rupiah appreciated 0.76 percent to IDR 11,450 per US dollar by 15:00 local Jakarta time according to the Bloomberg Dollar Index. Meanwhile, the IHSG gained 1.09 percent to 4,975.13 by the same time. Main reason for this strong performance is the official declaration of the PDI-P to form a coalition with NasDem and PKB.

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The Indonesian rupiah exchange rate continued its recent depreciating trend on Thursday (08/05). According to the Bloomberg Dollar Index, the currency had depreciated 0.36 percent to IDR 11,619 per US dollar at 13:30 local Jakarta time. Apart from market participants' wait and see attitude ahead of results of Bank Indonesia's Board of Governors Meeting, which is held today and will inform whether the current benchmark interest rate of 7.50 percent will be maintained, increased concerns about exports to China also put pressure on the rupiah.

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The Indonesian government revised down its target for the country's manufacturing growth in 2014 to 6 percent year-on-year (yoy) from 6.4 to 6.8 percent (yoy) previously. Main reason for the downgrade was the lower than expected GDP growth result in the first quarter of 2014. Earlier this week, Statistics Indonesia announced that the Indonesian economy expanded 5.21 percent in Q1-2014, the slowest quarterly growth pace since the fourth quarter of 2009. Last year, Indonesia's manufacturing sector grew 6.19 percent (yoy).

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Indonesian companies engaged in the production of crude palm oil (CPO) recorded impressive financial figures in the first quarter of 2014. Combined, 13 CPO companies that are listed on the Indonesia Stock Exchange posted IDR 3 trillion (USD $260.9 million) in net profits over the first quarter of 2014, a 116.1 percentage growth from the same period last year. Main reasons for this growth are the sharply depreciated Indonesian rupiah exchange rate in combination with the rising global CPO price and looming new El Niño cycle.

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On 4 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 macroeconomic assumptions of the Indonesian government, April inflation, the March trade balance, April manufacturing, an update on the rupiah, the 2014 presidential election, and more.

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Although we initially expected that the benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) would be supported by the various macroeconomic data (inflation, trade balance, and manufacturing activity) that were released by Statistics Indonesia today, the opposite is what happened. The index went into red territory amid profit taking, although the bond market in fact strengthened and foreign investors recorded net buying at IDR 224 billion (USD $18.7 million).

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The number of air passengers in Indonesia will most likely fail to meet its growth target in 2014. Based on government data, the number of air passengers in Southeast Asia’s largest economy reached 47.5 million in the first eight months of 2014, a 5.82 percentage point growth from the same period last year. However, the Indonesia National Air Carrier Association (INACA) initially targeted annual passenger growth in the range of 12-15 percent for 2014. Amid slowing economic growth, people’s purchasing power has declined.

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The market showed today (27/10) that the composition of Indonesian President Joko Widodo’s cabinet did not live up to expectations. On Sunday afternoon, Widodo had announced the names of the ministers inside his Working Cabinet (Kabinet Kerja) after having delayed the announcement for almost a week as several of his ministerial candidates needed to be replaced having been red flagged by the country’s Corruption Eradication Commission (KPK). This then heightened expectations that Widodo’s cabinet would constitute a ‘dream team’.

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Indonesian stocks and the rupiah have rebounded on Friday due to several internal and external factors. During the first trading session on Friday (17/10), the benchmark stock index of Indonesia (Jakarta Composite Index, or IHSG) surged 0.94 percent to 4,998.14 points. Meanwhile, based on the Bloomberg Dollar Index, the Indonesian rupiah exchange rate had appreciated 0.26 percent to IDR 12,228 per US dollar by 12:30 pm local Jakarta time. Why do Indonesian stocks and the rupiah perform well on Friday?

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In line with global stock indices, the benchmark index of Indonesia (Jakarta Composite Index, abbreviated IHSG) declined on Thursday’s trading day. Falling indices on Wall Street were a major concern to global investors as weak corporate and economic data may indicate that the economic recovery of the USA is not as structural as previously assumed. The NY empire state manufacturing index, US retail sales, US chain store sales, and US business inventories all weakened and ‘infected’ Asian stock indices, including the IHSG.

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Despite the fact that foreign investors continued to record net selling (IDR 216.9 billion) and despite mostly declining stock indices in Southeast Asia, the benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) rose 0.19 percent to 4,922.59 points on Tuesday’s trading day (14/10). The IHSG was particularly supported by rising consumer and manufacturing stocks. Indonesian stocks were also supported by the appreciating rupiah exchange rate.

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Indonesian Finance Minister Chatib Basri said that the lower pace of economic growth in China, the world’s second-largest economy, is a major concern for Indonesia as it leads to declining demand for commodities (and thus places downward pressure on commodity prices). As Indonesia is a major commodity exporter - such as coal, crude palm oil, nickel ore and tin - the country feels the impact of weak global demand for commodities. About 60 percent of Indonesia’s exports are commodities, mostly raw ones.

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Indonesian stocks tumbled at the first trading day of the week as investors are still concerned about the condition of the global economy. Declining stock indices on Wall Street at the end of last week had a negative impact on Asian stock indices, including Indonesia’s benchmark stock index (known as the Jakarta Composite Index, or abbreviated IHSG). The IHSG fell 1.01 percent to 4,913.05, its lowest level since 4 July 2014, on Monday (13/10). Foreign investors recorded net selling of IDR 595 billion (USD $49.6 million).

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In line with the volatile performance of global stocks, led by indices on Wall Street, the benchmark stock index of Indonesia (Jakarta Composite Index, or abbreviated IHSG) showed a volatile performance over the past week. US stocks mostly declined - except for the sharp rebound on Wednesday after Federal Reserve minutes signalled no higher US interest rates anytime soon - on concerns about the global economy (particularly the Eurozone), looming higher US interest rates, and the appreciating US dollar (hurting US exports).

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It was a relief for investors to learn that the benchmark stock index of Indonesia (Jakarta Composite Index, or IHSG) rebounded on Thursday (09/10) after having experienced a sharp decline on the previous day. The IHSG was supported by rising Asian stocks after indices on Wall Street had surged on Wednesday (08/10). Wall Street was up as minutes of the latest Federal Reserve meeting signalled that US interest rates will remain low 'for a while'. Another positive factor was that today’s appreciation of the Indonesian rupiah exchange rate.

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