Indonesia: The ball is in the Constitutional Court
The Indonesian election, which was held on April 17, 2019, has reached a more advanced stage. The formal outcome of the election was announced ahead of schedule, on May 21, 2019, by the Election Commission, with the incumbent, Joko Widodo, winning by a significant margin of 10%. However, the challenger has not conceded his loss but instead has filed a lawsuit against the Election Commission in the Constitutional Court. So currently the ball is in that court. The Constitutional Court will release its decision by June 28, 2019 at the latest. That decision will represent the ultimate result of the election. The inauguration of the new president will take place on October 20, 2019. Shortly after that, the Cabinet line-up will be announced.
On the economy, in early May, the Indonesian Central Board of Statistics released the national accounts data for the Q1 2019 performance of the economy. As predicted in our earlier report, in Q1 2019 the economy was reported to have grown at the rate of 5.07%, lower than the 5.18% reported in Q4 2018. This rate of growth, however, is slightly higher than growth in the first quarter of 2018 and of 2017.
Regarding the external accounts, in Q1 2019 one of the main problems faced by the Indonesian authorities was the current account deficit. In Q1 2019 the current account deficit stood at 2.6% of GDP, down from 3.59% of GDP in Q4 2019. However, compared with Q1 2018, which carried a deficit of 2.01%, the Q1 deficit for this year is considerably higher. For full-year 2018, the current account deficit stood at 2.98% of GDP. However, in 2018 the overall balance of payments registered a significant surplus, leading the foreign exchange reserves of the Central Bank to increase to $120.6 billion at the end of December 2018. In the Q1 2019 the overall balance of payments also registered a surplus of over $2.4 billion, leading foreign exchange reserves to rise to $124.5 billion. The foreign exchange reserves of Bank Indonesia in April 2019 stood at $124.3 billion.
The Central Board of Statistics also released the balance of trade data for the month of April 2019. The Indonesian balance of trade once again registered a deficit, to the tune of $2,501.9 million, the largest deficit in the last few years. While exports declined considerably, by 10.80%, to reach $12,596.9 million in April, imports increased significantly, by 12.25% to reach $15,098.8 million.
The Central Board of Statistics' inflation report showed relatively mild inflation for the month of April, at 0.44%. With that performance, Y/Y inflation stood at 2.83%, a level within the lower end of the target corridor of the Central Bank. At the same time, the Indonesian exchange rate remained stable, so the Central Bank decided to keep the benchmark interest rate constant at 6.00% at its meeting in May 2019 in order to further boost the economy.
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