Today, Bank Indonesia will start its February two-day policy meeting. Markets are eagerly awaiting whether the central bank of Indonesia will indeed cut its key interest rate (BI rate) again. Last month, it had cut the BI rate by 0.25 percent to 7.25 percent as inflation, the current account deficit and the rupiah rate were all under control. Although the rate cut was welcomed by the business community it was considered not enough to push borrowing costs lower in Southeast Asia's largest economy hence unable to boost economic activity significantly.

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On 14 February 2016, 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 over the last seven days. Most of the topics involve economic matters such as an update on Indonesia's current account deficit, free trade agreements, foreign direct investment, cement sales, the Bontang oil refinery project, and more.

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The central bank of Indonesia (Bank Indonesia) announced on Friday (12/02) that Indonesia's current account deficit widened to 2.39 percent of the country's gross domestic product (GDP), or USD $5.1 billion, in the fourth quarter of 2015 from a deficit of 1.94 percent of GDP (USD $4.2 billion) in the preceding quarter. This increase was due to a decline in the non-oil & gas trade balance surplus as non-oil & gas imports grew 7.5 percent (q/q) amid higher domestic demand amid accelerating economic growth in the last quarter of 2015.

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The Indonesia Deposit Insurance Corporation (in Indonesian: Lembaga Penjamin Simpanan, or LPS) expects to see Indonesia's current account deficit growing to USD $20.8 billion, equivalent to 2.3 percent of the country's gross domestic product (GDP), in 2016. In the following year, the institution estimates that the current account deficit will continue to widen toward USD $25.1 billion (2.5 percent of GDP) due to an expected decline in Indonesia's trade surplus.

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On Wednesday (13/01) Indonesia's central bank is set to start its monthly policy meeting. A novelty this year is that the monthly policy meetings of Bank Indonesia will take two days instead of one. Another interesting novelty is that Bank Indonesia invited Indonesia's Chief Economics Minister Darmin Nasution to attend the central bank's first policy meeting of 2016. Analyst opinions about whether Bank Indonesia has room to cut its relatively tight monetary policy are mixed.

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China's yuan (also known as renminbi) was included in the International Monetary Fund's Special Drawing Rights (SDR) - with a weightage average of 10.91 percent - on Tuesday (01/12), a decision that will take effect on 1 October 2016. Other currencies in the SDR are the US dollar, euro, pound sterling and yen. This move implies that the currency of the world's second-largest economy is increasingly regarded as a global financial instrument and will be increasingly used in transactions across the globe and widely traded on foreign exchange markets.

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Bank Indonesia Governor Agus Martowardojo announced during a press conference that the central bank kept its benchmark interest rate (BI rate) at 7.50 percent during the Board of Governor's Meeting on 17 November 2015. Meanwhile, Bank Indonesia maintained the deposit facility rate and the lending facility rate at 5.50 percent and 8.00 percent, respectively. The current interest rate environment is considered sufficient to face persistent global uncertainties caused by the looming Fed Fund Rate hike and sluggish economic growth in the Eurozone and China.

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On 15 November 2015, 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 subjects such as an analysis of Indonesia's Q3-2015 current account balance, a stock market & rupiah update, Indonesia's credit rating, income tax, the bond market, biofuel, property, forest fires, and more.

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The current account balance of Indonesia improved due to the stronger non-oil & gas trade balance. Indonesia's current account deficit eased to USD $4.0 billion, or 1.86 percent of the country's gross domestic product (GDP), in the third quarter of 2015. This performance was much better than the USD $7.0 billion deficit (3.02 percent of GDP) recorded in Q3-2014 or USD $4.2 billion (1.95 percent of GDP) in Q2-2015. Meanwhile, the balance of payments showed a deficit of USD $4.6 billion, up from the deficit of USD $2.93 billion in the preceding quarter.

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After Islamic New Year celebrations, Indonesia’s financial markets reopened on Thursday (15/10). The sharp appreciation of the Indonesian rupiah on Thursday morning is remarkable. By 10:10 am local Jakarta time, the rupiah had appreciated 2.36 percent to IDR 13,295 per US dollar (Bloomberg Dollar Index) hence extending last week’s gains when Indonesia’s currency strengthened around 9 percent against the greenback. Emerging markets assets are still gaining on signs that the Federal Reserve will not raise US interest rates in the short-term.

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Indonesia’s current account balance – which measures the flow of goods, services and investment - remains a source of concern. In the second quarter of 2018 Indonesia’s current account deficit widened to USD $8.02 billion or 3.0 percent of gross domestic product (GDP). It is the biggest quarterly deficit since Q2-2014 and implies that Indonesia is dependent on foreign capital to fund its deficits. This makes investors nervous and therefore foreign funds rapidly exit Indonesia in times of global turmoil.

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Based on the latest reports - and contrary to earlier plans - the Indonesian government will not postpone the development of 15,200 MW of power projects. Earlier the government said it wanted to delay various power projects in an effort to curtail imports, thus improve the country's current account balance and ease heavy pressures on the rupiah exchange rate.

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Concerns about Indonesia's current account balance increased after Bank Indonesia announced last week that the country's current account deficit widened to USD $8.02 billion, or 3.0 percent of gross domestic product (GDP), in the second quarter of 2018. It is Indonesia's highest quarterly deficit since Q3-2014, thus putting additional pressures on the rupiah exchange rate.

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Indonesia's current account balance - the broadest measure of the country's international trade - showed a deficit of USD $5.5 billion, equivalent to 2.15 percent of the nation's gross domestic product (GDP), in the first quarter of 2018. Compared to Q4-2017 (when the deficit was recorded at USD $6.0 billion, or 2.3 percent of GDP), the current account deficit (CAD) declined.

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Data from the central bank of Indonesia (Bank Indonesia) show Indonesia's current account deficit widened modestly to USD $2.4 billion (or 1.0 percent of Indonesia's gross domestic product, GDP) in the first quarter of 2017. This increase was driven by rising deficits in the oil & gas trade balance and primary income. In the last quarter of 2016 the current account deficit was at (an upward revised) 0.9 percent of GDP. Despite slight widening, Indonesia's current account balance is regarded as being in a healthy state, especially considering the major improvement compared to Q1-2016.

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Bank Indonesia, the central bank of Indonesia, announced on Friday (10/02) that Indonesia's balance of payments surplus reached USD $4.5 billion in the fourth quarter of 2016 as the capital and financial accounts' surplus managed to (more than) compensate for the USD $1.8 billion current account deficit (or 0.8 percent of the country's gross domestic product/GDP) in the same quarter. Regarding full-year 2016, Indonesia posted a USD $12.1 billion surplus in its balance of payments, while its current account deficit was equivalent to 1.8 percent of GDP.

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The central bank of Indonesia (Bank Indonesia) expects Indonesia's inflation to reach slightly below 1 percent month-to-month (m/m) in July 2016. According to central bank surveys, Indonesia's inflation accelerated in the first and second week of July by 1.18 percent (m/m) and 1.25 percent (m/m), respectively. Juda Agung, Executive Director of Bank Indonesia's Economic and Monetary Policy Department, said inflation tends to peak ahead of - and during - the Idul Fitri holiday (4-8 July) but is set to ease in the third and fourth week.

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Tomorrow (05/02), Statistics Indonesia is scheduled to release Indonesia's official full-year 2015 economic growth figure. Nearly all analysts expect to see a figure that reflects the continuation of slowing economic growth. Southeast Asia's largest economy expanded 5.0 percent in 2014 and this is expected to have eased further to 4.7 percent or 4.8 percent in 2015 on the back of (interrelated) sluggish global growth, low commodity prices, and weak export performance. Domestically, Indonesia has or had to cope with high interest rates and inflation (hence curtailing people's purchasing power and consumption as well as business expansion).

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The central bank of Indonesia (Bank Indonesia) is expected to keep its benchmark interest rate (BI rate) relatively high in order to safeguard Indonesia's financial stability in 2016 (instead of seeking accelerated economic growth through a rate cut). Despite easing pressures on inflation and the country's current account balance, Bank Indonesia Governor Agus Martowardojo said that persistent global uncertainty (referring to the looming US Fed Fund Rate hike and China's slowdown) justifies the tight monetary stance.

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Indonesia's current account deficit eased to USD $4.01 billion, or 1.86 percent of the country's gross domestic product (GDP), in the third quarter of 2015. The central bank (Bank Indonesia) said this improvement is particularly caused by a stronger non-oil & gas trade balance. However, Indonesia's capital and financial account surplus declined to USD $1.2 billion, causing the balance of payments deficit to widen to USD $4.6 billion from USD $2.9 billion in the preceding quarter.

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