Although growth forecasts for Indonesia, the Philippines and Singapore were cut, the Asian Development Bank did not alter its 5.8 percent growth forecast in 2015 for developing Asia.

Bank Indonesia Governor Agus Martowardojo responded to the growth cut saying that the 4.8 percent (y/y) growth pace is still in line with the growth range that has been set by Indonesia’s central bank (4.7-5.1 percent y/y in 2015). Given the current global and domestic weak environment, Indonesia’s growth pace is still solid, he added.

Indonesia's Quarterly GDP Growth 2009–2015 (annual % change):

 Year    Quarter I
   Quarter II    Quarter III    Quarter IV
 2015        4.72        4.67         4.73
 2014        5.14        5.03         4.92         5.01
 2013        6.03        5.81         5.62         5.72
 2012        6.29        6.36         6.17         6.11
 2011        6.45        6.52         6.49         6.50
 2010        5.99        6.29         5.81         6.81
 2009        4.60         4.37         4.31         4.58

Source: Statistics Indonesia (BPS)

Martowardojo also commented on Indonesia’s inflation. In the last month of the year, the central bank expects monthly inflation around 0.5 percent due to the impact of Christmas and New Year celebrations. This would imply that annual inflation eases below the 3 percent (y/y) mark. At the end of 2014, Indonesia experienced heavy inflationary pressure due to the subsidized fuel price hike in November 2014. In November 2015, annual inflation stood at 4.89 percent (y/y).

Despite inflation being under control, the central bank of Indonesia still has limited scope to cut its benchmark interest rate (currently at 7.50 percent) as the looming US interest rate hike and quantitative easing programs in Europe and Japan cause high volatility on global markets.

Inflation in Indonesia:

Month  Monthly Growth
          2013
 Monthly Growth
          2014
 Monthly Growth
          2015
January          1.03%          1.07%         -0.24%
February          0.75%          0.26%         -0.36%
March          0.63%          0.08%          0.17%
April         -0.10%         -0.02%          0.36%
May         -0.03%          0.16%          0.50%
June          1.03%          0.43%          0.54%
July          3.29%          0.93%          0.93%
August          1.12%          0.47%          0.39%
September         -0.35%          0.27%         -0.05%
October          0.09%          0.47%         -0.08%
November          0.12%          1.50%          0.21%
December          0.55%          2.46%
Total          8.38%          8.36%          2.37%

Source: Statistics Indonesia (BPS)

Inflation in Indonesia and Central Bank Target 2008-2015:

   2008  2009  2010  2011  2012  2013  2014  2015
Inflation
(annual percent change)
  9.8   4.8   5.1   5.4   4.3   8.4   8.4   2.8¹
Bank Indonesia Target
(annual percent change)
  5.0   4.5   5.0   5.0   4.5   4.5   4.5   4.0

¹ projection Bank Indonesia
Sources: World Bank and Bank Indonesia

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