Thursday May 16 2019
Indonesia Leaves Rate Steady as Expected
Bank Indonesia l Agna Gabriel | agna.gabriel@tradingeconomics.com

Bank Indonesia left its benchmark 7-day reverse repo rate unchanged at 6 percent on May 16th 2019, as widely expected. Policymakers said the decision is consistent with efforts to maintain the external stability of the Indonesian economy amid uncertainty over the increasing global financial market. The lending and the deposit facility rates were also left steady at 6.75 percent and 5.25 percent respectively.

Excerpts from the Bank Indonesia Press Release:

Indonesia's economic growth is lower than the forecast influenced by the declining global economy. Indonesia's economy in the first quarter of 2019 grew 5.07% (yoy), lower than the previous quarter of 5.18% (yoy), although it increased from 5.06% in the first quarter of 2018. The decline in global economic growth and more commodity prices low has had an impact on the decline in Indonesia's export growth, which then affects household consumption and slowing non-construction investment. The effect of spending related to 2019 Election activities on consumption is lower than forecast. Spatially, the slowdown in national economic growth was mainly influenced by declining growth in Java, Kalimantan and Papua, while other regions increased. Forward, efforts to boost domestic demand in terms of investment, especially the private sector, need to be increased to mitigate the negative impact of the lack of recovery in export performance due to the global economic slowdown. Overall, Bank Indonesia predicts Indonesia's 2019 economic growth to be below the midpoint of the range 5.0-5.4%. Bank Indonesia will take a policy mix with the Government and related authorities to maintain the momentum of economic growth.

The weakening Rupiah exchange rate in May 2019 was affected by the impact of global uncertainty and the seasonal pattern of increasing foreign exchange demand. After earlier strengthening in April 2019, the Rupiah exchange rate on May 15, 2019 was recorded to weaken 1.45% point to pointcompared to the final level of April 2019 and 1.36% on average compared to the average of April 2019. The weakening rupiah exchange rate in May 2019 was inseparable from the influence of global sentiment related to escalating trade wars which put pressure on emerging market currencies, including the Rupiah. In addition, the seasonal pattern of increasing foreign exchange demand for the needs of non-resident dividend payments also affected the weakening of the rupiah. Going forward, Bank Indonesia views the Rupiah exchange rate will move stably with market mechanisms that are maintained in line with the outlook for the improved BOP 2019. To support the effectiveness of exchange rate policies and strengthen domestic financing, Bank Indonesia continues to accelerate financial market deepening, both in the money market and foreign exchange.

April 2019 inflation is under control so that it sustains overall economic stability. The Consumer Price Index (CPI) inflation remained low, which in April 2019 was recorded at 0.44% (mtm) or 2.83% (yoy), although it increased compared to the previous month's inflation of 0.11% (mtm) or 2.48 % (yoy). The increase in April 2019 inflation was mainly influenced by the increase in volatile food inflation and administered prices inflation, while core inflation was stable. Inflation volatile food mainly sourced from commodity onions, peppers and eggs. Administered prices inflationmainly from air freight and cigarette tariffs. Meanwhile, controlled core inflation is inseparable from the consistency of Bank Indonesia's policies in directing inflation expectations, including in maintaining exchange rate movements in accordance with its fundamentals. Going forward, Bank Indonesia will remain consistent in maintaining price stability and strengthening policy coordination with the Government, both at the central and regional levels, to ensure inflation remains low and stable which is predicted to be below the midpoint of the 3.5 ± 1% inflation target range in 2019.




Wednesday May 15 2019
Indonesia Posts Largest Trade Gap on Record
Statistics Indonesia l Chusnul Ch Manan | chusnul@tradingeconomics.com

Indonesia’s trade deficit widened to USD 2.50 billion in April 2019 from a USD 1.67 billion gap in the same month a year earlier and compared to a market consensus of a USD 0.5 billion gap. It was the largest trade gap on record, as exports tumbled 13.1 percent year-on-year while imports fell at a softer 6.58 percent.

Exports from Indonesia slumped 13.10 percent from a year earlier to USD 12.60 billion in April 2019, worse than an expected 7.15 percent fall and after a downwardlly revised 9.4 percent decrease in the prior month. It was the sixth straight month of decrease in exports, as sales of non-oil and gas products dropped by 10.98 percent to USD 11.86 billion and those of oil and gas plunged by 37.06 percent to USD 0.74 billion.

Compared to the previous month, exports dropped 10.80 percent, as sales non-oil and gas products declined 8.68 percent while those oil and gas slumped by 34.95 percent. By categories, outbound shipments fell for mineral fuel (-6.37 percent); animal/nabat fats and oils (-19.11 percent); electric machinery/equipment (-18.25 percent); iron and steel (-14.05 percent), and jewelery (-54.28 percent). By contrast, sales rose for footwear (8.66 percent); rubber and rubber goods (15.10 percent); various chemical products (6.64 percent); pulp (21.39 percent), and fertilizer (66.36 percent).
 
Sales decreased to: Japan (-10.84 percent); the US (-0.01 percent); Thailand (-2.09 percent); Germany (-3.15 percent); India (-12.83 percent); Taiwan (-2.34 percent); South Korea (-18.89 percent); the Netherlands (-8.75 percent), and Singapore (-34.73 percent). Meanwhile, outbound shipment increased to: China (3.22 percent); Australia (6.14 percent); Italy (20.73 percent), and Malaysia (3.15 percent). 

Imports declined by 6.58 percent from a year earlier to USD 15.10 billion in March, following an upwardlly revised 7 percent drop in the prior month and compared to market expectations of a 12.1 percent fall. It marked the fourth straight month of yearly drop in inbound shipments, amid efforts from the government to reduce purchases and help manage the country's current account deficit. Purchases of oil and gas declined by 3.99 percent to USD 2.24 billion while those of non-oil and gas fell 7.02 percent to USD 12.86 billion. 
 
Compared to the prior month, imports surged by 12.25 percent, with purchases of non-oil and gas rose 7.82 percent while those of oil and gas jumped by 46.99 percent. Imports went up for all categories: raw material (12.09 percent); consumption goods (24.12 percent); and capital goods (6.78 percent). Among major trading partners, imports decreased from: the US (-0.89 percent); India (-3.55 percent); Thailand (-10.41 percent), and Singapore (-0.40 percent). Meantime, imports increased from China (22.91 percent); Japan (2.46 percent); South Korea (4.62 percent); Taiwan (9.50 percent); Germany (5.61 percent); Malaysia (3.05 percent); the Netherlands (34.79 percent); Australia (29.91 percent), and Italy (23.25 percent).
 
Considering the first four months of the year, the trade balance recorded a deficit of USD 2.56 billion, compared with a deficit of USD 1.41 billion in the same period of 2018.
 
 




Monday May 06 2019
Indonesia Q1 GDP Annual Growth Weakens to 1-Year Low
Statistics Indonesia | Chusnul Ch Manan | chusnul@tradingeconomics.com

Indonesia's annual economic growth eased to 5.07 percent in the first quarter of 2019 from 5.18 percent in the previous three-month period and below market consensus of 5.18 percent. This was the weakest growth rate in one year, as both private consumption and fixed investment rose at softer pace.

On the expenditure side, household consumption rose 5.01 percent in the first quarter, after a 5.08 percent increase in the previous period while fixed-investment went up 5.03 percent, slowing from 6.01 percent in the December quarter. On the other hand, net external demand contributed positively to the GDP growth as exports fell 2.08 percent (vs 4.33 percent in Q4) and imports plunged at a faster 7.75 percent (vs 7.10 percent in Q4). Meanwhile, government spending climbed 5.21 percent in the first quarter, compared with a 4.56 percent advance in the previous period.

On the production side, output growth slowed for: agriculture (1.81 percent vs 3.87 percent in Q4); manufacturing (3.86 percent vs 4.25 percent); electricity and gas (4.12 percent vs 5.46 percent); transportation & storage (5.25 percent vs 5.34 percent); accommodation & food services (5.87 percent vs 5.95 percent); and public administration, defense and social security (6.45 percent vs 7.13 percent).
 
Meantime, GDP expanded faster for: construction (5.91 percent vs 5.58 percent); mining and quarrying (2.32 percent vs 2.25 percent); wholesale and retail trade (5.26 percent vs 4.39 percent); business services (10.36 percent vs 8.94 percent); financial and insurance services (7.33 percent vs 6.27 percent); real estate (5.49 percent vs 4.24 percent); water and waste management (8.95 percent vs 7.92 percent); information and communication (9.03 percent vs 7.17 percent); education (5.62 percent vs 4.97 percent); health and social services (8.61 percent vs 7.80 percent); and other services (9.99 percent vs 9.08 percent);

For 2019, the government is targeting economic growth at 5.3 percent, while the central bank has forecast a range of 5.0-5.4 percent.




Monday May 06 2019
Indonesian Economy Contracts 0.52% QoQ in Q1
Statistics Indonesia | Rida Husna | rida@tradingeconomics.com

Indonesia's gross domestic product shrank 0.52 percent quarter-on-quarter in the three months to March 2019, worse than market expectations of a 0.4 percent fall and following a 1.69 percent contraction in the previous period. Private consumption remained sluggish, while there were sharp declines in both fixed investment and government spending.

On the expenditure side, private consumption remained subdued (0.04 percent vs 0.09 percent in Q4), while fixed investment contracted sharply (-5.74 percent vs 3.80 percent) and government spending slumped (-45.78 percent vs 37.72 percent). Meantime, net external demand contributed positively to the GDP as imports plunged 17.34 percent (vs 2.96 percent in Q4), much more than a 7.04 percent drop in exports (vs -2.22 percent in Q4).

On the production side, activity contracted for: mining and quarrying (-0.25 percent vs -0.16 percent); electricity and gas (-3.70 percent vs 1.46 percent); water supply, sewerage, waste management and remediation activities (-0.15 percent vs 3.53 percent); construction (-4.30 percent vs 4.60 percent); transportation and storage (-0.56 percent vs 0.2 percent); public administration (-9.49 percent vs 12.47 percent); education services (-10.78 percent vs 11.45 percent); and healthcare and social activities (-1.26 percent vs 5.98 percent). By contrast, output grew the most for agriculture, forestry and fishing (14.10 percent vs -21.41 percent), followed by financial services & insurance (3.33 percent vs -0.02 percent); information and communication (2.77 percent vs 0.40 percent); real estate activities (2.52 percent vs 0.91 percent), business activities (2.44 percent vs 1.76 percent); wholesale and retail trade (1.27 percent vs -2.18 percent); accommodation and food service (0.68 percent vs 1.51 percent); and manufacturing (0.37 percent vs -1.16 percent).




Thursday April 25 2019
Indonesia Leaves Monetary Policy Unchanged
Bank Indonesia l Stefanie Moya | stefanie.moya@tradingeconomics.com

Bank Indonesia left its benchmark 7-day reverse repo rate unchanged at 6 percent on April 25th 2019, as widely expected. Policymaker said that the decision is consistent with efforts to strengthen the external stability of the Indonesian economy. The lending and the deposit facility rates were also left steady at 6.75 percent and 5.25 percent respectively.

Excerpts from the Bank Indonesia Press Release:

Economic growth in the first quarter of 2019 is predicted to remain strong, supported by domestic demand. Consumption remains high, supported by sustained purchasing power and public confidence and continued fiscal stimulus, including through social assistance and election-related spending. Investment slowed slightly in line with the seasonal pattern of the beginning of the year and is predicted to rebound in the following quarters supported by improving business confidence and continuing infrastructure projects. However, the role of net exports has not been strong in line with the impact of slowing global economic growth and declining commodity prices. Looking ahead, the prospect of economic growth remains strong supported by domestic demand in line with the confidence of economic players who are maintained. The policy mix of Bank Indonesia, the Government, and related authorities will continue to be strengthened in order to maintain the momentum of domestic economic growth which is predicted to be in the range of 5.0-5.4%.

The Indonesian balance of payments (NPI) in the first quarter of 2019 is predicted to be surplus so that it supports efforts to strengthen external stability.The outlook for the balance of payments is due to a forecast for a reduced current account deficit and a substantial surplus in the capital and financial account. The prospect of an improvement in the current account deficit was supported by an increase in the trade balance surplus of 0.33 billion US dollars in February 2019 to 0.54 billion US dollars in March 2019. The increase in surplus was influenced by increases in the non-oil and gas trade balance and a decline in the oil and gas trade balance deficit. Meanwhile, the capital and financial account surplus was quite large, supported by inflows of foreign capital, which up to March 2019 was recorded at US $ 5.5 billion. With this development, the position of foreign exchange reserves at the end of March 2019 reached 124.5 billion US dollars, equivalent to financing of 7.0 months of imports or 6.8 months of imports and payments of Government foreign debt, and is above the international adequacy standard of around 3 months of imports. Going forward, policy synergy will continue to be focused on efforts to strengthen external resilience. Steps to strengthen exports, including improving the performance of the tourism sector, and controlling imports will continue to be pursued so that the current account deficit 2019 can reach the range of 2.5% of GDP. The policy was also directed at attracting inflows of foreign capital to finance the current account deficit.

The rupiah exchange rate strengthened supported by the performance of the external sector which continued to improve. The Rupiah exchange rate on April 23, 2019 was recorded to increase 1.17% on a point to point basis compared to the end of March 2019 and 0.58% on average compared to the average of March 2019. When compared to the 2018 level, the Rupiah exchange rate also strengthened 2.17% as a point to pointand 0.80% on average. This development is inseparable from the development of large foreign capital inflows into the domestic financial market, including stock market inflows that continued in April 2019. Looking ahead, in line with the outlook for an improved external sector driven by the outlook for the domestic economy which remains positive and uncertain reduced, Bank Indonesia viewed the Rupiah exchange rate as stable with a well-maintained market mechanism. To support the effectiveness of exchange rate policies and strengthen domestic financing, Bank Indonesia continued to accelerate financial market deepening, particularly in the money and foreign exchange markets.

Inflation in March 2019 remained low and under control.


Monday April 15 2019
Indonesia Trade Surplus Narrows in March
Statistics Indonesia l Chusnul Ch Manan | chusnul@tradingeconomics.com

Indonesia’s trade surplus narrowed to USD 0.54 billion in March 2019 from a USD 1.12 billion in the same month a year earlier and compared to a market consensus of a USD 0.1 billion gap. Exports tumbled 10.01 percent year-on-year while imports fell at a softer 6.76 percent. Considering the first three months of the year, the trade balance recorded a deficit of USD 0.19 billion, compared with a surplus of USD 0.31 billion in the same period of 2018.

Exports from Indonesia tumbled 10.01 percent from a year earlier to USD 14.03 billion in March 2019, slightly less than an expected 11.82 percent fall and after a downwardlly revised 11.16 percent decrease in the prior month. It was the fifth straight month of decrease in exports, as sales of non-oil and gas products dropped by 9.23 percent to USD 12.93 billion and those of oil and gas slumped by 18.32 percent to USD 1.09 billion.

Compared to the previous month, exports jumped 11.71 percent, as sales non-oil and gas products surged 13 percent while those oil and gas dropped by 1.57 percent. By categories, outbound shipments went up for mineral fuel (24.21 percent); ore, metal crust and metal ash (110.41 percent); organic chemicals (33.41percent); iron and steel (40.38 percent), and paper/carton (21.32 percent). In contrast, sales decreased for iron and steel objects (-9.81 percent); organic chemicals (-31.98 percent); jewelery (-4.84 percent); salt, sulfur, lime (-18.30 percent); locomotives and train equipment (-76.55 percent), and dregs/leftovers from the food industry (-38.12 percent).
 
Sales increased to: the US (8.47 percent); China (28.47 percent); Japan (13.52 percent); Thailand (5.73 percent); Germany (6.54 percent); Australia (8.51 percent); India (10.37 percent); Italy (17.56 percent); Taiwan (55.77 percent); South Korea (8.21 percent); the Netherlands (5.24 percent); Malaysia (3.98 percent), and Singapore (0.72 percent).
 
Imports declined by 6.76 percent from a year earlier to USD 13.49 billion in March, following a downwardlly revised 13.81 percent slump in the prior month and compared to market expectations of a 3.76 percent fall. It marked the third straight month of yearly drop in inbound shipments, amid efforts from the government to reduce purchases and help manage the country's current account deficit. Purchases of oil and gas slumped by 31.17 percent to USD 1.54 billion while those of non-oil and gas dropped 2.29 percent to USD 11.95 billion. 
 
Compared to the prior month, imports surged by 10.31 percent, with purchases of non-oil and gas jumped 12.24 percent while those of oil and gas fell by 2.70 percent. Imports went up for all categories: raw material (12.34 percent); consumption goods (13.49 percent); and capital goods (0.47 percent). Among major trading partners, imports rose from: the US (20.73 percent); China (4.95 percent); Japan (3.93 percent); South Korea (9.53 percent); Taiwan (20.62 percent); Singapore (29.71 percent); Germany (17.93 percent); India (12.69 percent); Malaysia (19.98 percent), and Thailand (8.95 percent).Meantime, imports decreased to the Netherlands (-11.74 percent); Australia (-4.26 percent), and Italy (-4.41 percent).
 
Considering the first three months of the year, the trade balance recorded a deficit of USD 0.19 billion, compared with a surplus of USD 0.31 billion in the same period of 2018.
 


Thursday March 21 2019
Indonesia Holds Key Interest Rate at 6%
Bank Indonesia l Chusnul Ch Manan | chusnul@tradingeconomics.com

Bank Indonesia kept its benchmark 7-day reverse repo rate unchanged at 6 percent on 21th March 2019, as widely expected. Policymakers said the decision was consistent with efforts to reduce the current account gap towards a range of 2.5% of GDP in 2019 and maintaining the attractiveness of domestic financial markets for foreign investors. The lending and the deposit facility rates were also left steady at 6.75 percent and 5.25 percent respectively. For 2019, the central bank expects Indonesia inflation below midpoint of 2.5-4.5 percent target range while GDP growth is projected between 5.0-5.4 percent.

Excerpts from the Bank Indonesia Press Release:

Interest rate and exchange rate policies will continue to focus on external stability as Bank Indonesia implements other accommodative policies to stimulate domestic demand as follows: Maintaining a monetary operations strategy oriented towards increasing available liquidity by regular and scheduled term-repo transactions in addition to FX Swaps; Strengthening accommodative macroprudential policy by raising the Macroprudential Intermediation Ratio (MIR) from 82-92% to 84-94% in order to bolster bank financing extended to the corporate sector; Accelerating financial market deepening policy by: (i) strengthening market conduct through mandatory treasury certification for market players; and (ii) encouraging hedging instruments against domestic interest rate fluctuations through regulations concerning Rupiah Interest Rate Swaps (IRS) and Overnight Index Swaps (OIS); and Strengthening payment system policy to support economic activities and financial inclusion.

Solid economic growth is predicted in the first quarter of 2019 on the back of domestic demand. Robust consumption growth is expected to endure, supported by maintained public purchasing power and consumer confidence, fiscal stimuli through social spending, as well as election spending. Investment has slowed slightly in the first quarter of 2019 in line with cyclical trends at the beginning of the year, yet investment growth is expected to regain momentum in subsequent periods due to infrastructure projects. Notwithstanding, the contribution of net exports has continued to decrease in line with global economic moderation and sliding commodity prices. Consequently, Bank Indonesia projects economic growth in 2019 on the range 5.0-5.4%.

Indonesia’s balance of payments (BOP) is expected to improved in the first quarter of 2019, thus bolstering external resilience. The position of reserve assets stood at USD123.3 billion at the end of February 2019, equivalent to 6.9 months of imports or 6.7 months of imports and servicing government external debt, which is well above the international standard of three months. Looking forward, policy synergy will constantly be improved in order to strengthen external resilience. Measures to stimulate exports and tourism as well as control imports will be maintained in 2019, thus maintaining the current account deficit within a manageable range of 2.5% of GDP. Furthermore, policy will also be directed towards attracting capital flows to offset the current account deficit.

The rupiah continues to appreciate as external sector performance improves. As of 19th March 2019, the rupiah strengthened 1.05% (ptp) or by an average of 0.85%, supported by a deluge of foreign capital inflows to the domestic financial markets. Bank Indonesia predicts rupiah stability in accordance with the currency’s fundamental value and maintained market mechanisms. To support exchange rate policy effectiveness and strengthen domestic financing, Bank Indonesia will accelerate financial market deepening efforts, targeting the money market and foreign exchange market.

Inflation is trending downwards and remains under control within the target corridor for 2019 at 3.5%±1% (yoy).
 


Friday March 15 2019
Indonesia Trade Balance Swings to Surplus in February
Statistics Indonesia l Chusnul Ch Manan | chusnul@tradingeconomics.com

Indonesia posted a trade surplus USD 0.33 billion in February 2019, swinging from a USD 0.05 billion deficit in the same month a year earlier and beating market consensus of a USD 0.7 billion gap. It was the first trade surplus since September last year, as exports tumbled 11.33 percent year-on-year while imports slumped at a faster 13.98 percent.

Exports tumbled 11.33 percent from a year earlier to USD 12.53 billion, worse than market consensus of a 4.5 percent fall and after a downwardly revised 4.3 percent drop in the prior month. It was the fourth straight month of decrease in exports and the steepest annual decline since June 2017. Sales of oil and gas products slumped by 21.75 percent to USD 1.09 billion while those of non-oil and gas tumbled by 10.19 percent to USD 11.44 billion. 

Compared to the previous month, exports fell 10.03 percent, as sales oil and gas dropped by 11.85 percent while those non-oil and gas products decreased 9.85 percent. By categories, outbound shipments went down for animal/vegetable oils and fats (-13.27 percent); organic chemicals (-31.98 percent); mineral fuel (-14.54 percent); ore, metal crust and metal ash (-50.32 percent); and footwear (-29.53 percent). In contrast, sales increased for inorganic chemicals (28.00 percent); copper (87.88 percent); jewelery (53.03 percent); and pulp (38.70 percent).
 
Sales declined to: the US (-15.79 percent); China (-11.07 percent); Japan (-13.57 percent); Thailand (-5.52 percent); Germany (-25.82 percent); Australia (-18.47 percent); India (-4.74 percent); Italy (-38.06 percent); Taiwan (-34.23 percent); South Korea (-11.02 percent); and the Netherlands (-9.49 percent). Meanwhile, sales to both Malaysia (16.33 percent) and Singapore (0.66 percent) increased.
 
Imports slumped unexpectedly by 13.98 percent from a year earlier to USD 12.20 billion in February, following an upwardlly revised 2.1 percent drop in the prior month, compared to market expectations of a 0.3 percent growth. It marked the second straight month of yearly drop in inbound shipments and the steepest since June 2017, amid efforts from the government to reduce purchases and help manage the country's current account deficit. Purchases of oil and gas tumbled by 30.53 percent to USD 1.55 billion while those of non-oil and gas dropped 10.89 percent to USD 10.65 billion.  

Compared to the prior month, imports slumped by 18.61 percent, with purchases of non-oil and gas plunged 20.14 percent while those of oil and gas fell by 6.28 percent. Imports went down for all categories: raw material (-21.11 percent); consumption goods (-17.43 percent); and capital goods (-7.09 percent). Among major trading partners, imports decreased from: the US (-20.16 percent); China (-25.87 percent); Japan (-6.77 percent); South Korea (-5.40 percent); Taiwan (-34.94 percent); Singapore (-32.38 percent); Germany (-32.78 percent); the Netherlands (-15.34 percent); Malaysia (-28.52 percent); Australia (-9.87 percent), and Italy (-33.41 percent). Meantime, imports increased to India (5.29 percent); and Thailand (10.13 percent).

Considering January to February of 2019, the trade balance recorded a deficit of USD 0.73 billion, compared with a deficit of USD 0.81 billion in the same period of 2018.


Thursday February 21 2019
Indonesia Leaves Monetary Policy Unchanged
Bank Indonesia l Chusnul Ch Manan | chusnul@tradingeconomics.com

Bank Indonesia left its benchmark 7-day reverse repo rate unchanged at 6 percent on 21th February 2019, as widely expected. Policymakers said the decision was consistent with efforts to reduce the current account gap towards a range of 2.5% of GDP in 2019 and maintaining the attractiveness of domestic financial markets for foreign investors. The lending and the deposit facility rates were also kept steady at 6.75 percent and 5.25 percent respectively. For 2019, the central bank expects Indonesia economy to grow between 5.0-5.4 percent.

Excerpts from the Bank Indonesia Press Release:

Moving forward, Bank Indonesia will undergo accommodative macroprudential policy and strengthen payment system policy to expand economic financing. Coordination with the Government and other relevant authorities are increased in order to maintain economic stability, to maintain economic growth momentum.

National economic growth momentum has been maintained on the back of domestic demand. Solid economic growth in Indonesia reached 5.18% (yoy) in the three months to December 2018, up from 5.17% (yoy) in the previous period. The economy continues to expand on resilient domestic demand in line with increasing household consumption and consumption by non-profit institutions serving households (NPISH). Investors remain upbeat on the domestic economic outlook, which has fed through to strong investment performance. Meanwhile, net exports are negative, weighed down by global economic softness and falling commodity prices. Moving forward, Bank Indonesia projects solid economic growth for 2019 in the 5.0-5.4% range, bolstered by household and NPISH consumption as well as strong investment.

In the final quarter of 2018, the current account deficit stood at USD9.1 billion in the fourth quarter of 2018, equivalent to 3.57% of GDP. For the year, however, the current account deficit has remained within a manageable threshold at 2.98% of GDP. In January 2019, Indonesia’s trade balance experienced a USD1.16 billion deficit as a corollary of dwindling global demand against a backdrop of persistently strong domestic demand. Foreign capital inflows were maintained in January 2019, recorded at USD2.2 billion, which continued into February 2019. Consequently, the position of reserve assets was solid at USD120.1 billion at the end of January 2019, equivalent to 6.7 months of imports or 6.5 months of imports and servicing government external debt, which is well above the international standard of three months. Furthermore, Bank Indonesia will continue to enhance coordination with the Government in order to strengthen external sector resilience by reducing the current account deficit to around 2.5% of GDP in 2019, amongst others.

The Rupiah appreciated, thus supporting economic stability. Point to point, the Rupiah gained 3.63% (ptp) in the fourth quarter of 2018 compared with conditions at the end of the previous period, boosted by a positive balance of payments. The strong Rupiah persisted into January 2019, appreciating another 2.92%, with the trend continuing into February 2019 on the back of non-resident capital inflows to domestic financial markets, drawn by solid economic fundamentals as well as attractive on domestic financial assets and less global economic uncertainty. Bank Indonesia believes that the Rupiah will remain stable, in line with market mechanisms.

Inflation is low and stable within the target corridor for 2019 at 3.5%±1%. CPI inflation in January 2019 was recorded at 0.32% (mtm) or 2.82% (yoy), down from 0.62% (mtm) or 3.13% (yoy) the month earlier. Looking ahead, Bank Indonesia will consistently maintain price stability and strengthen policy coordination with the Central and Regional Government to maintain low and stable inflation, which is projected within the inflation target of 3.5%±1% in 2019.
 


Friday February 15 2019
Indonesia Trade Gap Larger than Estimated in January
Statistics Indonesia l Chusnul Ch Manan | chusnul@tradingeconomics.com

Indonesia's trade deficit widened to USD 1.16 billion in January 2019 from USD 0.76 billion in the same month a year earlier and worse than market consensus of a USD 0.97 billion gap. It was the fourth straight month of trade gap, as exports dropped 4.70 percent year-on-year while imports decreased at a softer 1.83 percent.

Imports declined 1.83 percent from a year earlier to USD 15.03 billion in January, following an upwardlly revised 1.72 percent rise in the prior month, compared to market expectations of a 1.05 percent drop. It marked the first yearly drop in inbound shipments since June 2017, amid efforts from government to reduce purchases and help manage the country's current account deficit. Purchases of oil and gas plunged by 25.22 percent to USD 1.69 billion while those of non-oil and gas went up 2.21 percent to USD 13.34 billion.  

Compared to the prior month, imports dropped by 2.19 percent, with purchases of gas tumbled by 16.58 percent while those of non-oil and gas showed no growth. Imports went down for both capital goods (-12.10 percent) and consumption goods (-16.75 percent) while those increased for raw material (2.08 percent). Among major trading partners, imports decreased from: the US (-1.97 percent); China (-6.69 percent); India (-14.74 percent); and Thailand (-3.53 percent). Meantime, imports increased to Japan (2.70 percent); South Korea (2.39 percent); Taiwan (20.68 percent); Singapore (0.60 percent); Germany (41.45 percent); the Netherlands (9.83 percent); Malaysia (7.64 percent); Australia (13.55 percent), and Italy (39.86 percent).
 
Exports fell 4.70 percent from a year earlier to USD 13.87 billion, worse than market consensus of a 2.54 percent fall and after a downwardly revised 3.57 percent drop in the prior month. Sales of non-oil and gas products dropped by 4.50 percent to USD 12.63 billion while those of oil and gas declined by 6.72 percent to USD 1.23 billion. 
 
Compared to the previous month, exports went down 3.24 percent, as sales oil and gas slumped by 29.30 percent while those non-oil and gas products went up by 0.38 percent. By categories, outbound shipments fell for: nickel (-41.04 percent); machinery and mechanical aircraft (-22.42 percent); electric machinery and equipment (-12.81 percent); chemical products (-11.06 percent); and mineral fuel (-1.76 percent). By contrast, sales increased for: ore, metal crust and metal ash (37.08 percent); organic chemicals (32.12 percent); iron and steel (10.84 percent); footwear (9.85 percent), and
vehicles and parts (7.70 percent).
 
Sales fell to: Singapore (-24.51 percent);  Malaysia (-20.33 percent); the Netherlands (-9.08 percent); India (-9.07 percent); Italy (-8.58 percent), South Korea (-4.16 percent); and Taiwan (-2.48 percent). On the other hand, sales increased to the US (2.00 percent); China (2.06 percent); Japan (3.18 percent); Thailand (31.47 percent); Germany (2.63 percent), and Australia (5.55 percent).