Economic Outlook

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Since March 2019, the US bonds market has recorded an inverted yield curve, meaning that the yields of short-term bonds have surpassed those of long-term bonds. This condition indicates a negative perception of the US’s economic performance as the inverted slope of the yield curve is very frequently correct in predicting the occurrence of recession...
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Indonesia’s economic growth in Q1 2019 is recorded at 5.07% (y.o.y), lower than 5.17% (y.o.y) as  in the previous quarter. Despite of the seasonal pattern, the global stresses caused by economic downturn and wait-and-see mode of investors ahead of the 2019 general election might have impeded overall household consumption and investment. The manufacturing sector, which...
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Growth momentum in the next quarter is likely to sustain, although some volatility is seen near term after the 2019 general elections. We maintain economic growth forecast for Q1 2019 at 5.2%, as we foresee stronger growth in household consumption. Household spending, which remains the primary driver of Indonesia’s economic growth, is projected to strengthen...
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Following previous expectation, we see that the economy in Q1 2019 will be slightly improved. A series of unexpected trends since November, such as the reversal of capital flow to emerging markets, lower crude oil prices, and negotiations between US and China, has brought positive sentiment to the domestic market. The effect of the influx...
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Despite wide fluctuation of international oil price, slightly higher consumption growth, and rapidly depreciating currency, inflation in 2018 remains remarkably low, with headline inflation at 3.13% (y.o.y) in December 2018. Historically, faster consumption growth drives demand for goods and services and thus tend to push inflation higher. Similarly, without additional fuel subsidy budget, higher oil...
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Current account deficit and political climate will be two of the key themes that will affect Indonesia’s economy in 2019. Relatively weak export performance due to overreliance on raw materials export, particularly on crude palm oil, and higher imports due to infrastructure drives have driven Indonesia to run trade deficit again in Q2 and Q3...
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Persistently muted household consumption growth, which is still under 5%, signals that households remain very vigilant to fluctuations in income growth and external risks despite very low and manageable inflation. Under better circumstances, both government and central banks might want to push growth further by relaxing monetary policies and increasing government expenditure. However, both fiscal,...
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