Reading the Anecdotal Evidence
Making a good judgment about the Indonesian economy based only on the official statistics is sometimes inadequate. At the same time, using only anecdotal evidence to measure the direction of the economy can also be misleading. However, using some anecdotal evidence to enrich the official data may enhance the quality of the analysis.
Based on official data, the Indonesian economy continued to slow through the second quarter of 2015. The latest data for Indonesian GDP showed growth of 4.67%. However, Bank Indonesia recently released a statement that the economy has a better chance of improving in the third and fourth quarters of 2015. While some people have been skeptical about this statement, anecdotal evidence has shown that not all sectors of the economy were so bad.
At the same time the economy was slowing, the Indonesian airline Garuda reported a brisk increase in its passengers: 18% growth was not small compared with 4.7% GDP growth for the first half of 2015. Similarly, corn production on the island of Sumbawa increased by 20%, enabling producers to export a significant amount to the Philippines. Corn producers reported that once the dams currently being built by President Jokowi’s administration started to operate, corn farmers could enjoy the harvest season twice. Indonesian consumer products giant Unilever Indonesia reported an increase in sales of about 7% in the first half of 2015, slightly higher than Hindustan Lever of India, which reported a sales increase of 4% for the same period. There is more evidence such as this that may enrich the analysis of the Indonesian economy.
On the external front, the August trade balance once again reported a surplus in the more normal trade activities. Exports for that month reached $12.70 billion while imports reached $12.27 billion, leaving the trade surplus at the level of approximately $430 million. Of that amount, non-oil exports reached $11.17 billion, an increase of 11.23% month over month, although lower year over year by 5.99%. The price factor for this year, especially in commodities, contributed the most to the decrease in non-oil exports. Meanwhile, non-oil imports reached $10.16 billion, up 30.48% month over month but down 17.06% year over year. With the surplus in August 2015, the trade balance has reported straight surpluses for the first eight months of this year.
On the domestic front, inflation in August 2015 was 0.39% month over month, leaving year-over-year inflation at 7.18%, while inflation year to date was 2.29%. Given that level of inflation, the Central Bank remained confident in the achievement of its inflation target, and at its September 2015 meeting decided to keep the benchmark rate constant at 7.5%.
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