Strong Growth

3 12 2007

Indonesia 3Q GDP Growth


In September 2007, the dRi Coincident Economic Index (CEI), which tracks the current state of the economy, fell to 105.1 (down by 1.0% month-on-month) from 106.2 in August 2007. This is the first time the CEI has fallen in seven months. As such, it is too early to conclude that the uptrend in the CEI has been broken. Indeed, the fall in the CEI is only temporary we believe, and the CEI is likely to rebound in the coming months.

The latest data shows that the Indonesian economy grew by 6.5% year-on-year (YoY) in Q3 2007, slightly up from the 6.3% YoY growth pace in Q2 2007. As such, the Indonesian economy is picking up its growth pace.

The dRi Leading Economic Index (LEI) that moves ahead of the Coincident Index (around 6 to 12 months) rose to 110.7 in September from 110.3 in August 2007 (up by 0.4% m-o-m). The LEI had increased from March 2007 till July 2007, but declined in August 2007. The rebound in the LEI in September suggests that the economic recovery is likely to be sustainable and that the economy is likely to continue to pick up its growth pace in the near term.

Improving purchasing power, combined with relatively low interest rates, have spurred domestic demand. Investment activities have also increased significantly. As a result, the engine of economic growth is more balanced than before, thus meaning that the current economic expansion is more sustainable than before.

Against this backdrop, we reiterate our forecast that the Indonesian economy will grow by 6.23% in 2007. The expansion is expected to continue in 2008, in which year the economy is expected to grow by 6.33%. Indonesia Early Economic Indicators November 2007

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Indonesia Early Economic Indicator – October 2007

31 10 2007

Early Indicators


Strong Domestic Demand

In August 2007, the dRi Coincident Economic Index (CEI), which tracks the current state of the economy, rose further to 106.41 from 106.12 in July 2007 (up by 0.27% month-on-month). The CEI has now risen on six straight occasions, strongly suggesting that the economy is continuing to expand further.

The dRi Leading Economic Index (LEI), which moves ahead of the Coincident Index (around 6 to 12 months), fell to 110.28 in August from 110.72 in July 2007 (down by 0.40% m-o-m). The fall, however, does not mean that the Indonesian economy is heading toward a slowdown in the near term. The fall in the LEI, we believe, is only temporary, and the LEI is likely to rebound in the coming months.

Improving purchasing power, combined with relatively low interest rates, have spurred domestic demand. Against this backdrop, investment activities have also increased significantly. As a result, the engine of economic growth is more balanced than before, thus meaning that the current economic expansion is more sustainable than before.

All in all, we believe that the current economic recovery is sustainable. And we maintain our forecast that the Indonesian economy is likely to continue picking up its growth pace for the rest of 2007. As such, we reiterate our forecast that the Indonesian economy will grow by 6.23% in 2007. And the expansion is expected to continue in 2008, in which year we forecast the economy to grow by 6.33%.





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.