The first taste of the political year
Indonesian politics will be very busy in the presidential election year in 2019. The first taste of that political year was seen early, during the election for Governor of the Jakarta Metropolitan early this year. However, in 2018, Indonesian politics will be even busier, with a number of regional elections, especially in the major provinces such as West Java, Central Java and East Java. The nomination of the candidates for governors and district heads, as well as the competition between those candidates during the election process, will truly mirror what happens in 2019.
Indonesian politics were also activated when at his inauguration speech in October 16, 2017 the new governor of Jakarta made a statement that could be seen as divisive, by mentioning the word “pribumi” or "indigenous people". The new governor said that this is the time of the rise of the indigenous people in Jakarta. This statement had the connotation that the new governor saw a division between indigenous people and non-indigenous people, which in this case pointed to the Chinese people. Instead of healing wounds and uniting people after a very divisive election, the new governor, in fact, introduced terminology that will divide people even further.
The new phenomenon would certainly influence the political as well as the economic climate of the country if it were not controlled. The new governor clarified the statement by referring to the era of colonialism. However, people can read between the lines, giving color to the prospects for Indonesia. Consumption demand in Jakarta was weak after the election, while in other provinces in Java it was better, and in the outer islands it improved because of the rise in commodity prices. This is what happened in the economy, influenced significantly by political sentiment.
In other news on the economic front, the external sector continued to show encouraging results. The trade balance showed a higher surplus, from $1,719.9 million in August 2017 to $1,760.9 million in September 2017. Indonesian exports declined slightly, from $15,229.4 million in August to $14,541.8 million in September, down $687.6 million or 4.51%. However, imports declined even more during the month, from $13,509.5 million in August to $12,780.9 million, down $728,6 million or 5.39%. All the declines in both exports and imports were mostly due to the lower number of days in the month from 31 days to 30 days. Removing that factor, both exports and imports were relatively stable.
In the domestic economy, the month of September 2017 was marked by relatively mild inflation of 0.13%. The yearly inflation in September 2017 stood at 3.72%, a level at the lower part of the target corridor of the Central Bank. Having reduced the benchmark rates for two months in a row, the Central Bank decided to keep the benchmark rate constant at 4.25% at its recent meeting of the Monetary Council.
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