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You are able to fetch the most recent presentations on the Indonesian Central Bank’s Recent Economic Developments dated June 2010, April 2010, March 2010, February 2010, and January 2010. The February 2010 full edition comes with a section on Economic Outlook for 2010. Below is a quick description of the content of the most recent edition.
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Preview (June 2010 edition)
The economy grew by 5.7% in Q1-2010 and forecasted to grow within the range of 5.5% – 6.0% by the end of 2010. In 2011, the economic growth predicted to climb to 6.0%-6.5%.
Economic data up to end of Q1-2010 supported us to believe that the economy, in line with the development in the global economy, is moving toward better development than we previously expected on the beginning of this year. The optimism also supported by latest development in the perception indicators such as yield spread, sovereign rating, CDS, CRC – OECD, etc. On the backdrops, Bank Indonesia revised economic growth outlook for 2010 and 2011 to be consecutively within the range of 5.5 – 6.0% and 6.0 – 6.5%.
The latest Board of Governors’ Meeting of Bank Indonesia convened in June 2010, resolved to hold the BI Rate at the level of 6.50%. This decision follows a comprehensive evaluation of the latest developments and outlook for the economy, which is showing steady over all improvement. After concluding that the BI Rate at this level is on track with achievement of the 5% ± 1% inflation target for 2010 and 2011 and is conducive to measures for bolstering the economic recovery process. The decision is also consistent with actions to safeguard domestic financial stability amid escalating risks of uncertainty from the debt crisis now besetting Greece and a number of other European nations.
Prices held steady with inflationary pressure during May 2010 at subdued levels. CPI inflation reached 0.29% (mtm) with the annual rate 4.16% (yoy), ahead of the 0.15% (mtm) or 3.91% (yoy) level recorded one month earlier. Prices increases in May we redriven mainly by inflation involatile foods following disruptions in supply and distribution. In contrast, inflationary pressure from administered prices remain slow.
In the financial sector, the banking system sustained at stable condition and the banking intermediation function are improving. Banking system stability in Indonesia is sufficiently robust to anticipate contagion from the debt crisis in Europe . This is borne out in the high CAR for the banking system, reported in the most recent data at 19.2%, in addition to the comfortably safe level of NPLs gross at less than 5%. Improvement in the bank intermediation function is reflected in the 17.6% (yoy) credit growth recorded at end-May 2010. At this level, credit growth remains with in the bounds of the planned lending set out in the Bank Business Plans and is consistent with the growing confidence of economic actors in the improving economic outlook.
Balance of payments charted another surplus at a robust US$6.6 billion in Q1-2010, marking significant improvement over the Q4-2009 surplus (US$4.0billion). Key to the up beat performance was both surpluses in the current account and the capital & financial account. The current account registered a US$1.6 billion surplus, down from the Q4-2009 surplus at US$ 3.6 billion, which explained primarily by a down turn in the balance of trade caused by rising imports of oil and gas as well as non-oil and gas. The capital and financial account registered a US$4.3 billion surplus, up significantly from the Q4/2009 surplus of US$ 1.3 billion explained by its vigorous performance indirect investment and portfolio investments.
Balance of payments recorded another surplus despite the heightened risks on global financial markets. The current account posted a sizeable surplus. However, the capital and financial account surplus narrowed slightly due to portfolio capital out flows triggered by negative sentiment on global financial mrkets in response to the Greek debt crisis, in addition to Indonesia ‘s official external debt servicing obligations. As a result, international reserves at 31 May 2010 are recorded at 74.6 billion US dollars, equivalent to 5.87 months of imports and servicing of official external debt.
The average value of Rupiah in Q1-2010 strengthened by 2.2% as a result of a more robust balance of payments, declining risk perceptions and attractive yields. Entering Q2-2010, Rupiah weakened which was driven by foreign capital outflows. During May 2010, on average, Rupiah fell 1.52% to IDR9.167 against USD yet still on Q2-2010 range projections at IDR8.700 -IDR9.300 against USD. The pressure on Rupiah was mainly caused by sentiment factors associated with the Greek crisis. Meanwhile, fundamentals are stable, which reflected in the sound balance of payment performance.
The parliament on 3rdMay 2010 approved the government‘s proposal of 2010 revised budget. The revision is perceived as a necessary measure to adjust the current economic conditions especially changes in the macroeconomic assumptions. The revised budget increased deficit from 1.6 to 2.1%, in order to contain increasing subsidies figures due to rising commodity prices mainly from oil, and lower tax revenue in line with addition in tax incentives program.
