Ending 2017 with new optimism
New optimism has emerged in the period approaching the end of 2017. While in the first half of the year skepticism abounded because of the slow growth in corporate sales of many companies, in Q3 the situation improved a bit. In the last quarter of this year, new optimism was driven by the brighter economic outlook for Indonesia indicated by a number of large banking institutions, as well as by the recent rating upgrade by Fitch.
Such optimism was also displayed in the Indonesian stock exchange despite repatriation of capital from the Indonesian market. For a few months, many foreign investors oversold their shares. However, Indonesian investors took the opportunity to increase their portfolios, which resulted in a continued increase in the stock market index. After crossing a level of 6,000, there has still been steam to continue the rise in the stock market index in recent days. Similarly, loans in the Indonesian banking system continued to grow (although not as sharply as in the boom years), indicating optimism by corporates to expand their businesses in the country.
Optimism was also supported by solid growth in the sales and profits of many public companies listed on the Jakarta Stock Exchange. Cement and steel sales continued to show solid growth in October, while domestic car sales also indicated positive growth. With the rapid growth of vehicle exports from Indonesia, many auto producers expanded their production levels.
On the external front, the Central Board of Statistics published an interesting report on the trade balance for the month of November 2017. Exports for that month increased only marginally but imports grew more sharply, which finally led the trade surplus to decline significantly. Imports hit their highest level of the past two years. Exports reached $15,282.1 million, marginally higher than the figure for the previous month. However, compared with the same period of the previous year, total exports increased by 13.18%. Meanwhile, imports in November rose faster, by 6.42% month over month, to reach $15,154.9 million. Compared with the same period of 2016, imports grew by 19.62%. This resulted in a trade surplus of $127.2 million.
The Central Board of Statistics also released the inflation report, which showed relatively mild inflation for November 2017, at 0.20%. With that performance, year-on-year inflation stood at 3.3%, at the lower end of the Central Bank's target corridor. Such benign inflation, as well as the constructive external balance, led the Central Bank to keep the benchmark interest rate at 4.25% at its Monetary Policy Meeting in December, despite the announcement of an increase in the Funds rate announced by the US Fed.
Now read on...
Register to sample a report