The return of optimism
After displaying some pessimism, Kompas Daily, the most prestigious and credible newspaper in Indonesia, reported the return of optimism in the FMCG (fast-moving consumer goods) industries. A number of retailers gave testimony to the optimism they shared. The FMCG industries also reported better-than-expected results despite a sluggish performance in Q1 this year. At the same time, the automotive industry reported higher domestic sales from January to June 2018 compared with the same period of the previous year. Total vehicle sales during the first semester reached 553,700 units, an increase of 3.8% compared with the previous year. Unfortunately, domestic sales of Toyota in that period slumped by 17.32% due to stiff competition from Honda, Mitsubishi and the newcomer, Wuling Motors. Exports of vehicles also increased in the first half of 2018, by more than 15%. At the same time, domestic sales of motorcycles also enjoyed gains of around 11% compared with the previous year. In the meantime, exports of motorcycles increased by more than 30% in the first half of 2018. Meanwhile, one by one, large banks reported better profits than during the same period of last year. Overall, the tone was somewhat positive for the Indonesian economy, even though the National Accounts Data may show otherwise later next month.
On the external front, after some erratic movement in the trade balance data, the Indonesian economy displayed a more or less normal picture, even though the volume was much lower than usual because there was port activity in only two thirds of the month in June 2018. The rest of the month was a national holiday sanctioned by the government, including mandatory leave for a few days. The Indonesian Central Board of Statistics reported a huge surplus in its balance of trade report for the month of June. However, both exports and imports were scaled down because of the lower number of working days during the month. Exports in June reached $12,999.2 million, down by 19.8% month over month, although they were 11.47% higher year over year. Meanwhile, imports reached $11,256.6 million or a decline of 36.27% from the previous month, even though they were 12.66% higher than the same month of 2017. Therefore, the trade balance was reported at a surplus of $1,742.6 million. Even with that surplus in June, however, the total trade balance for the first half of 2018 remained in deficit of $1,021.7 million.
The Central Board of Statistics also released the inflation report, which showed relatively mild inflation for the month of June at 0.59%. With that performance, year-over-year inflation stood at 3.12%, a level at the lower end of the target corridor of the Central Bank. This benign inflation, as well as the external balance report, led the Central Bank to keep the benchmark interest rate at 5.25% at its monetary policy meeting in July.
Now read on...
Register to sample a report