ECONOMIC UPDATE - Monetary Review - Firing on all cylinders

The higher interest rate is not only meant to combat inflation but also to guard Indonesia from the adverse impact on capital outflows due to other countries’ monetary tightening policy.

ECONOMIC UPDATE - External trade review - Heightened demand of commodity

Increased demand for energy products from other countries also helped exports to rise. However, we expect the strong export rally will likely to be softer as the commodity prices are normalizing.

Fund Performance

ECONOMIC UPDATE - What to Expect - Expensive Petroleum

The prices of non-subsidized fuels have been cut instead as mentioned below. The fuel price hike is the government’s last option to reduce the ballooning energy subsidies due to the higher global oil price.

ECONOMIC UPDATE - Inflation - Deflation on harvest season

The core inflation has already achieved 3.04% YoY or slightly surpassed the favorable level at 3% YoY. This may be a hint for Bank Indonesia (BI) to raise the interest rate again by 25 bps this month.

ECONOMIC UPDATE - Monetary Review - Wasting no time for hike

For the first time since Nov-18, finally Bank Indonesia (BI) has just raised the BI-7DRRR by 25 bps to 3.75% in Aug-22. This is quite surprising as this came in above the consensus estimate at 3.5% (unchanged).

ECONOMIC UPDATE - Inflation - Soaring up

Statistics Indonesia (BPS) recorded 0.64% MoM (4.94% YoY) of inflation in Jul-22 or the highest since Oct-15 where it was at 6.25% YoY. The rate was higher than our estimate and consensus at 4.72% and 4.82% YoY.

ECONOMIC UPDATE - External trade review

The import has not been impacted by the rising tension between China and Taiwan lately so it still grew, supported by the better domestic manufacturing performance in Jul-22.

ECONOMIC UPDATE - Sustain above 5%

Household still played the most important role as it contributed 51.5% to GDP. It grew at 2.42% QoQ (5.51% YoY) in 2Q22. The growth was on the back of Ramadan momentum and the ease of Covid-19 cases back then.

ECONOMIC UPDATE - What to Expect - True mettle

Indonesia briskly rebounded as the economic growth jumped from -0.74% YoY in 1Q21 to 5.01% YoY in 1Q22. For 1H22, we predict it will grow at 4.7% YoY emphasizing the consistent economic recovery amid the pandemic.

ECONOMIC UPDATE - External trade review - After the export ban lifted

The slower import was still associated with China’s as its economy shrank sharply in 2Q22 recording a 0.4% YoY (vs 4.8% YoY in 1Q22) of economic growth after several Covid-19 lockdowns.

ECONOMIC UPDATE - External trade review - Protectionism backfires

The export plummeted due to the palm oil export ban to curb the rising domestic inflation from cooking oil prices hike in May-22. Besides, the slower import was still associated with China’s feeble economy as the China government still imposes several lockdowns there.

ECONOMIC UPDATE - Inflation - Heating up

The inflation will go up with decent pace in 2H22 as the price normalization goes on especially on food and transportation prices after Ramadan month and the fuel price hike lately. Besides, the core inflation showed a slight deceleration compared to the previous month.

ECONOMIC UPDATE - BoP review - Good starter

Current account balance posted a USD0.22 bn surplus in 1Q22 (0.07% of GDP) or lower than consensus at USD0.92 bn of surplus.