Current account balance posted a higher surplus at USD4.38 bn in 3Q22 (1.28% of GDP). It was higher than consensus at USD3.25 bn so it brings positive sentiment towards market.
For a third consecutive months, Bank Indonesia (BI) delivered a 50 bps rate hike on BI-7DRRR to 5.25% in Nov-22 or in line with consensus.
Government allocates Rp169.8 tn Healthcare budget in 2023. We see healthcare budget declined compared to 2022, this due to the absence of Covid-19 budget.
Indonesia is the best performing market in Asia and among the world’s best-performing emerging markets this year.
The rupiah is relatively stable compared to other as well as JCI hits the high records. Therefore, we believe Indonesia can bloom its true mettle ahead.
As seen on Exhibit 164, palm oil is the most widely consumed vegetable oil and is estimated for 2022, the palm oil consumption amounted to over 73.87 mn mt worldwide.
The four SOE contractors under our coverage showed acceleration in new contracts growth of 41% YoY in 8M22 to a total of Rp44 tn supported by economic recovery from Covid-19.
Residential sales in the primary market have shown recovery following deep contraction in 2020 amidst pandemics.
Indonesia digital economy value is expected to grow almost 5x from 2021-2030F from the value of USD70 mn in 2021 to USD330 mn in 2030F.
After rising to a record high (USD48,078/ton in mid-March) following the Russian invasion of Ukraine late in February, nickel prices have taken a beating dropping to a low USD19,385/ton in July.
With the Russian coal and gas import ban still firmly in place, coal consumption in the European Union is expected to rise by 7% in 2022 on top of last year’s 14% jump.jj
The consumer staples sector has been under pressure in 2022 owing to a surge in global commodity prices.
Banks under our coverage should perform really well in 2022F with earnings grew 33% YoY.
In YtD 2022, competition has been stabilizing for telecommunication (telco) industry and we foresee the trajectory to remain positive for at least a few more quarters.
Rupiah slightly rebounded against USD, driving the exchange rate from two-year highs of Rp15,587/USD to Rp15,567/USD at the spot market right away after the decision of rate hike has been taken.
The high price of coal in Sep-22 saved the export performance. Ahead, we expect the lower trade surplus as the rally of commodity prices normalization lingers.
The jump of inflation was not followed by the food inflation (-0.68% MoM), which usually has the significant impact towards the headline inflation, due to the big harvest season in Aug-Sep 2022.
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.
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.
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.
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.
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).
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.