Faster Growth Despite Rising External Risks

15 01 2008

indonesia economic forecast 2008

GDP: Accelerating Since the Beginning of the Year

The Indonesian economy picked up its growth pace in 2007. From a growth pace of 6.0 percent in Q1 2007, the economy then expanded by 6.3 percent in Q2 2007 and 6.5 percent in Q3 2007. Nonetheless, in Q4 2007, we expect the Indonesian economy to show slightly slower growth of 6.2 percent as a result of slightly lower-than expected growth in government expenditures and private consumption in that particular quarter. Yet for the whole of 2007, the Indonesian economy is expected to grow by 6.3 percent, or much faster than the 5.5 percent growth pace in 2006.

Compared to other countries in the region, Indonesia is one of the fastest growing economies. Among the “emerging market” countries in Asia, the Indonesian economy ranked fourth in terms of growth over the last three quarters (up to the third quarter of 2007), with only the economies of China, India, and the Philippines growing more briskly than Indonesia’s economy.

Investment has helped drive the Indonesian economy over the last three quarters. Prior to 2006, investment (as measured by gross fixed capital formation) gave only a minimal contribution to economic growth. However, it then picked up significantly in 2007. Looking ahead, investment growth should remain strong. This is because spare capacity has been reduced significantly following the steady rise in domestic consumption since the beginning of this decade. Read the rest of this entry »

January 2008 Inflation Outlook: Unstable Rice Prices!

9 01 2008

indonesia flood

In December 2007, the consumer price index (CPI) shot up 1.10% MoM (month-on-month), after a 0.18% MoM rise in November. As such, the YoY (year-on-year) inflation rate fell slightly from 6.71% in November to 6.59% in December.

Prices rose in all components of the CPI. The largest increase was seen in the Foodstuffs component (up 2.47% MoM), followed by the clothing component (up 0.99% MoM), the housing component (up by 0.63% MoM), the processed foods component (up 0.91%), the medical care component (up 0.41% MoM), the transportation component (up 0.22% MoM), and the education component (up 0.12% MoM).

The December inflation figure was higher than we had expected. We knew that seasonality factors (Christmas and New Year) would push up the price of rice in December. Nonetheless, we did not expect foodstuff prices (especially rice prices) to increase as sharply as they did. In the previous year, the price of rice climbed higher due to the long dry season that delayed rice planting and led to rumors of rice scarcity. Also, the government agency responsible for maintaining the sustainability of the rice supply (Bulog) was apparently ill prepared to deal with the problem. Furthermore, rice imports could not be conducted in a timely manner due to the lengthy debate over whether such a policy would hurt the country’s rice farmers. Read the rest of this entry »

Weekly Currency 7 Januari 2008

8 01 2008

Nilai tukar Yen menguat terhadap USD dalam perdagangan minggu kemarin. Pada hari pertama perdagangan, Yen ditutup menguat pada level 111.7 dari level 112.3 pada penutupan hari Jumat minggu sebelumnya (28 Desember 2007). Pada hari perdagangan selanjutnya, Yen terus menguat hingga akhirnya ditutup pada level 108.6 di hari Jumat yang lalu (4 Januari 2008). Secara keseluruhan, Yen menguat sebesar 3.3% dibandingkan penutupan minggu sebelumnya.

Euro tidak banyak berubah terhadap Dolar Amerika dalam perdagangan minggu kemarin. Pada hari pertama perdagangan, Euro ditutup melemah pada level 1.459 dari level 1.472 pada hari Jumat minggu sebelumnya (28 Desember 2007). Namun pada perdagangan selanjutnya, Euro kembali menguat. Sehingga pada akhir perdagangan pekan kemarin, Euro ditutup pada level 1.474 pada hari Jumat kemarin. Secara keseluruhan, Euro hanya menguat sebesar 0.1% dari penutupan minggu sebelumnya.

Dalam perdagangan minggu kemarin, nilai tukar Rupiah melemah terhadap USD. Pada hari pertama perdagangan, Rupiah ditutup pada level 9,400 dari level 9,395 pada hari Jumat minggu sebelumnya (28 Desember 2007). Pada hari-hari perdagangan berikutnya, Rupiah relatif stabil. Namun pada akhir perdangangan minggu lalu, Rupiah melemah tajam dan ditutup pada level 9,460 pada Jumat kemarin. Secara keseluruhan, Rupiah melemah sebesar 0.6% dari penutupan minggu sebelumnya. Weekly Currency 7 Januari 2008

Weekly Outlook Nov26, 2007

26 11 2007

Weekly Outlook : Stocks may arrest their falls this week boosted by the rebound on Wall Street and the upbeat sentiment on regional markets. Moreover, the bad news on Temasek may also be overdone, since the ruling is company specific and should have a minimal impact on listed companies overall. And the historical tendency for stocks to do well in December should also not be disregarded. As such, the market may recover somewhat this week with the JCI heading toward the 2,630-2,650 level.

Stocks listed on the JSX extended their losses last week after the Indonesian anti-monopoly watchdog ruled against Temasek. The decision led to widespread selling as market players fear that foreign investors may be much more cautious now in their investment plans. Other market negatives were the persistently high crude oil prices that raise concerns over weaker corporate profits growth – fuel supplied to industrial customers in Indonesia is not subsidized – and lingering worries over the US economy outlook. Over the week, the JCI lost 99.19 points or 3.7 percent to 2,569.51. Read the rest of this entry »