Our Financial Columns offer analyses of subjects related to the Indonesian financial markets. Together, these columns - that also have high news value in the current state of the Indonesian economy - intend to provide a clear and detailed picture regarding the structure and performance of these markets.
In the last month of 2017 Indonesia posted a USD $270 million trade deficit according to the latest data from Statistics Indonesia (BPS). This result goes against the prediction of most analysts, who expected to see another trade surplus for Southeast Asia's largest economy. Indonesia posted a trade surplus in all months of 2017 with the exception of July and December.
Although the Indonesian rupiah has been strengthening against the US dollar since mid-December 2017, the rupiah may encounter serious pressures in the year 2018 amid US tax reforms, the US Federal Reserve's further monetary tightening, and unstable geopolitics. Meanwhile, Indonesian exports are expected to grow, but only in the range of 5-6 percent year-on-year (unlike 2017 when the nation's exports rebounded 17 percent).
Although realization of most components in Indonesia's state budget have improved in 2017, tax revenue realization and the management of energy subsidies remain the two big challenges for the Indonesian government. Southeast Asia's largest economy again failed to meet its tax revenue target last year. Per 31 December 2017 it collected IDR 1,151.5 trillion (approx. USD $85.3 billion) in tax revenue, only 89.74 percent of the target (excluding customs and excise).
The year 2017 already finished for equity investors and therefore we can take a look back at the performance of Indonesia's benchmark Jakarta Composite Index over the past 12 months. Indonesian stocks, generally, had a good year, with the benchmark index rising 19.99 percent to close 2017 at 6,355.65 points, a new all-time record high.
