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Today's Headlines Macroeconomy

  • Indonesia's Unemployment Rate Rises Slightly in August 2013

    Indonesia's unemployment rate rose slightly in August 2013 from the same month last year. The country's open unemployment rate rose from 6.14 percent to 6.25 percent (of the total labour force). In absolute numbers this translates to 7.4 million jobless Indonesians. Head of Statistics Indonesia, Suryamin, said that Indonesia's slowing economic growth was the main reason for the rise in unemployment, while the supply of human resources increased. In the third quarter of 2013, Indonesia's GDP growth fell to 5.62 percent (yoy).

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  • Bank Indonesia: Indonesia's October Inflation Likely to Fall Below 0.26%

    Perry Warjiyo, Deputy Governor of Indonesia's Central Bank (Bank Indonesia), expects that the inflation rate in October 2013 will fall below 0.26 percent (which is the average October inflation rate since 2007). Warjiyo said that a survey of Bank Indonesia indicated that up to the third week of October, inflation had only reached 0.06 percent. Low inflation - or preferably deflation - is needed to curb Indonesia's current high inflation rate. In September 2013, annual inflation was recorded at 8.40 percent.

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  • Bank Indonesia: Indonesia's External Debt Growth Slowing in August 2013

    Indonesia’s foreign debt was recorded at USD $257.30 billion in August 2013, a 0.9 decrease compared to foreign debt in July 2013 (USD $259.61 billion). On an annual basis (yoy), foreign debt growth in August was 6.6 percent, thus slowing compared to July’s growth of 7.4 percent (yoy). The central bank of Indonesia (Bank Indonesia) considers that the slowing growth in the country's foreign debt is in line with the slowing growth of the domestic economy. Indonesia's GDP growth forecast has been revised down to below the six percent mark.

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  • Sovereign Credit Rating of Indonesia held at BBB-/stable outlook

    The Rating and Investment Information Inc (R&I), a rating agency from Japan, kept Indonesia’s Sovereign Credit Rating at BBB- with a stable outlook. In their press release, R&I stated that the four key factors behind the decision are: (a) Indonesia’s capacity to achieve sustainable economic growth in the long term (at around six percent per year); (b) conservative fiscal management (causing a marginal fiscal deficit); (c) a sound banking sector; and (d) a low level of government debt.

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  • Indonesia's Current Account Deficit May Moderate to 2.6% in 2014

    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 Foreign Exchange Reserves Grow 2.8% in September 2013

    The central bank of Indonesia (Bank Indonesia) announced that Indonesia's foreign exchange reserves have increased slightly in September 2013. On 30 September, the reserves stood at USD $95.67 billion, a 2.88 percent increase from USD $92.99 billion one month earlier. The reserves in September are equivalent to 5.4 months of imports, or 5.2 months when servicing of government external debt is included. Recent US dollar demand for the import of oil is what put pressure on the reserves.

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  • World Bank: Indonesia's Resilience Tested, Adjustment Continues

    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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  • Indonesian Government Expects Trade Deficit to Ease to USD $4 Billion

    Indonesia's trade deficit is expected to amount to USD $4 billion by the end of 2013, implying a moderation from the USD $5.54 billion deficit that emerged between January and August 2013. Indonesia's exports are forecast to decline by about 5 percent in the remainder of 2013 due to the weak global environment, particularly with the current ongoing political uncertainties in the USA. As such, in order to combat the deficit, the government intends to limit imports. Next year, Indonesia will most likely continue to post a trade deficit.

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  • Bank Indonesia and China Extend Bilateral Currency Swap Arrangement

    Bank Indonesia and China Extend Bilateral Currency Swap Arrangement

    Governor of Bank Indonesia, Agus Martowardojo and Governor of the People’s Bank of China, Zhou Xiaochuan, signed an extension to the Bilateral Currency Swap Arrangement (BCSA), representing a tangible manifestation of strong financial cooperation between both central banks in the areas of monetary policy and financial system stability. “The agreement reflects regional commitment in the face of global uncertainty and will contribute propitiously towards maintaining macroeconomic and domestic financial stability,” emphasized Martowardojo.

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  • Indonesian Government Preparing Additional Policy Approach Package

    The government of Indonesia is busy preparing an extra package of policy responses aimed at stabilizing Indonesia's financial markets. Previously, the government had released a sort of 'rescue package' in late August after the rupiah depreciated sharply and the country's stock indices plunged. Panic had emerged due to the looming end of the Federal Reserve's quantitative easing program. Coupled with internal issues, it resulted in robust capital outflows from Indonesia. The new package will be released in October.

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Latest Columns Macroeconomy

  • What are the Economic Challenges Faced by President Joko Widodo?

    What are the Economic Challenges Faced by President Joko Widodo?

    Today (20/10), Central Jakarta seems to have changed into one big party as Joko Widodo was inaugurated as Indonesia’s seventh president earlier this morning. For the remainder of the day celebrations will be held at Monas (National Monument) and surrounding areas. However, it is of vital importance that Widodo (popularly known as Jokowi) will start to focus on this presidential duties tomorrow as the country is facing a number of economic challenges. What are these challenges?

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  • Moody’s Investors Service Positive about Indonesia’s Economy

    Moody’s Investors Service Positive about Indonesia’s Economy

    Global credit rating agency Moody’s Investors Service stated that it maintains a stable outlook for Indonesia’s sovereign and corporate debt rating in the next quarters due to the country’s healthy credit fundamentals, solid macroeconomy, and reduced political tensions. Moody’s believes that Indonesia’s fundamentals are strong enough to offset the negative impact of external pressures such as looming higher US interest rates and slowing economic growth in China. Moody’s had raised Indonesia’s sovereign debt rating to investment grade in late 2011.

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  • IMF & World Bank about Global Economic Growth and Indonesia

    IMF & World Bank about Global Economic Growth and Indonesia

    The International Monetary Fund (IMF) slightly cut its outlook for global economic expansion for both 2014 and 2015. The institution decided to lower its forecast due to weaker growth in Japan, Latin America and Europe. According the IMF’s latest estimate, the global economy will grow 3.3 percent year-on-year (y/y) in 2014, down from its previous estimate of 3.4 percent y/y, and 3.8 percent y/y in 2015 (down from 4.0 percent y/y in its July estimate). This is the third time this year that the IMF has had to cut its global economic growth forecast.

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  • Indonesian Government Eyes Economic growth of 5.8% in 2015

    The government of Indonesia agreed with the House Budget Committee to adjust the economic growth target of Southeast Asia’s largest economy in 2015 to 5.8 percent, 0.2 percentage point up from the initial growth target proposed by the government in the Financial Memorandum as well as the 2015 State Budget Draft (APBN). Still, the 5.8 percent gross domestic product (GDP) growth target constitutes the lowest growth target set in Indonesia’s state budget (excluding revised state budgets) since the year 2010.

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  • Economic Challenges Indonesia: Jokowi to Raise Fuel Prices Soon?

    Speculation has emerged that Indonesian President-elect Joko Widodo (Jokowi) plans to raise prices of subsidized fuels immediately after taking office in late October 2014. On Tuesday (02 /09), Jokowi said that he sees no other option than to raise these prices in an effort to relieve the budget deficit, curb the wide current account deficit and make more funds available for long-term productive public investments (such as on infrastructure, healthcare and education). The government has set aside IDR 291.1 trillion (USD $25 billion) for fuel subsidies in 2015.

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  • Current Account Deficit Indonesia at 4.27% of GDP; BI Rate Kept at 7.50%

    Current Account Deficit Indonesia at 4.27% of GDP; BI Rate Kept at 7.50%

    The central bank of Indonesia (Bank Indonesia) announced two important matters on Thursday (14/08). Firstly, the institution decided to maintain the benchmark interest rate (BI rate) at 7.50 percent, the overnight deposit facility rate (Fasbi) at 5.75 percent, and the lending facility rate at 7.50 percent. Secondly, it announced that Indonesia’s current account deficit widened to USD $9.1 billion, or, 4.27 percent of the country's gross domestic product (GDP) in the second quarter of 2014, a widening that is larger than initially forecast.

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  • Economic Growth of Indonesia Slows to 5.12% in the Second Quarter of 2014

    Economic Growth of Indonesia Slows to 5.12% in the Second Quarter of 2014

    Statistics Indonesia (BPS) announced on Tuesday (05/08) that Indonesia’s economy grew 5.12 percent in the second quarter of 2014 from the same quarter last year. This means that gross domestic product (GDP) growth of Indonesia has continued the slowing trend it has been experiencing since 2011. The 5.12 percentage point GDP growth in Q2-2014 is the slowest growth pace that has been recorded by Southeast Asia’s largest economy since the fourth quarter of 2009. What explains this slowing economic growth of Indonesia?

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  • Joko Widodo’s Political & Economic Agenda: Future of Jokowi’s Indonesia?

    Joko Widodo’s Political & Economic Agenda: Future of Jokowi’s Indonesia?

    When campaigning, presidential candidates will always promise a bright future in order to gain votes. It is particularly easy for a new presidential candidate to promise golden mountains as opposed to the incumbent president who needs to be more cautious making promises as people can point to the (failed) results of his promises during the presidential term. The 2014 Indonesian presidential election was particularly interesting as we saw two new presidential candidates and, thus, the ‘inflation of promises’.

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  • Update Economy of Indonesia; ICRA Indonesia's Monthly Review

    ICRA Indonesia, an independent credit rating agency and subsidiary of ICRA Ltd. (associate of Moody's Investors Service), publishes a monthly newsletter which provides an update on the financial and economic developments in Indonesia of the last month. In the June 2014 edition, a number of important topics that are monitored include Indonesia's inflation rate, the trade balance, the BI rate, the IDR rupiah exchange rate, and gross domestic product (GDP) growth. Below is an excerpt of the newsletter:

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  • Financial Update: Bank Indonesia Sees No Need to Alter Interest Rates

    At Bank Indonesia’s Board of Governors’ meeting, convened today (10/07), it was decided to keep the country’s benchmark interest rate (BI rate) at 7.50 percent, and the Lending Facility and Deposit Facility rates held at 7.50 percent and 5.75 percent, respectively. According to the central bank this policy is consistent with efforts to steer inflation back towards the target corridor of 4.5±1 percent in 2014 and 4.0±1 percent in 2015, as well as to reduce the current account deficit to a more sustainable level.

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