Expecting a rebound

27 04 2007

In February 2007, the dRi Coincident Economic Index (CEI), which tracks the current state of the economy, fell to 102.7 (down by 1.1% month-on-month) from 103.9 in January. The CEI has now fallen for three months in a row, suggesting some weaknesses in the economy.

The dRi Leading Economic Index (LEI), which moves ahead of the Coincident Index (around 6 to 12 months), rose to 108.2 in February from 107.8 in January 2007 (up by 0.4% m-o-m). The LEI had fallen in December and January, giving rise to some concerns on the prospects of the Indonesian economy. But the rebound in the LEI in February, however, suggests that the weaknesses in economic activities that have occurred since December 2006 is not likely to alter the current expansionary path of the Indonesian economy.

Furthermore, the sequential signaling method employed confirms that the Indonesian economy is not headed toward a prolonged slowdown. That is, looking forward, the likelihood of brisker economic activity remains high.

Against this backdrop, we reiterate our forecast that the Indonesian economy will grow by 6.2% in 2007. Get the full report.


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