The central bank of Indonesia (Bank Indonesia) reported that Indonesian consumers are becoming increasingly optimistic about economic prospects and their personal financial situation this year, evidenced by a 5.1 point rise in Bank Indonesia's Consumer Confidence Index to 112.6 points in January 2016. This index is based on a survey, involving 4,600 households in 18 cities across the archipelago (a reading above 100 indicates optimism, while a reading below 100 indicates pessimism).

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Indonesia's inflation rate rose 0.51 percent on a monthly basis in January 2016 according to the latest data from Statistics Indonesia (BPS). Suryamin, Head of BPS, said food products accounted for most of the inflationary pressures in the first month of the year. Inflation tends to have a peak in the months December and January due to Christmas and New Year celebrations when consumer demand for various products, including food items, increases (the other peak comes in the June-August period due to Islamic celebrations).

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Indonesia's inflation is expected to accelerate in January 2016 according to the country's central bank (Bank Indonesia). Bank Indonesia detected a spike in prices of several food commodities - such as shallots, chili, and beef - at the start of the year. Bank Indonesia Governor Agus Martowardojo told reporters that he expects the country's inflation rate to rise by around 0.75 percent month-on-month (m/m) in January. This would imply that inflation will accelerate to 4.38 percent on an annual basis (from 3.35 percent y/y in December 2015).

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Although global media focus on the vicious terrorist attacks that occurred today in Jakarta, the country's central bank (Bank Indonesia) made a surprise move by cutting its key interest rate (BI rate) by 25 basis points to 7.50 percent at the January policy meeting. It is a surprise as Bank Indonesia emphasized repeatedly that it is primarily focused on rupiah stability while - amid severe market volatility (due to economic turmoil in China) - the rupiah remains under pressure.

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Pada tanggal 10 Januari 2016, Indonesia Investments menerbitkan edisi terbaru dari newsletter-nya. Newsletter gratis ini, yang dikirim ke pelanggan kami sekali seminggu, berisi berita baru yang paling penting dari Indonesia yang telah dilaporkan di website kami selama tujuh hari terakhir. Sebagian besar topiknya mencakup masalah ekonomi seperti analisis dampak perlambatan ekonomi Republik Rakyat Tiongkok (RRT) terhadap Indonesia, update inflasi, manufaktur, produksi minyak, perbankan syariah, dan banyak lagi .

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Angka inflasi Indonesia pada bulan Desember 2015 lebih tinggi dari yang diharapkan pada 0,96% pada basis month-to-month (m/m). Tingkat inflasi bulanan yang tinggi dikarenakan kenaikan harga makanan dan transportasi selama perayaan Natal dan Tahun Baru. Namun demikian, tingkat inflasi tahunan Indonesia jatuh ke level terendah sejak 2010 karena hilangnya dampak kenaikan harga bahan bakar bersubsidi pada bulan November 2014 dari angka inflasi tahunan, maka realisasi inflasi jatuh jauh di bawah target pemerintah (5%) dan kisaran target bank sentral (3-5%) pada tahun 2015.

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Tahun lalu Indeks Harga Saham Gabungan (IHSG) turun 12,13% sehingga berakhir pada 4,593.01 poin pada 30 Desember 2015 di tengah ketidakpastian global yang parah akibat ancaman pengetatan kebijakan moneter di Amerika Serikat (AS) dan perlambatan ekonomi yang besar dari Republik Rakyat Tiongkok (RRT). Hari ini, Bursa Efek Indonesia (BEI) akan memasuki hari perdagangan pertamanya di tahun baru. Apa yang kita harapkan dari kinerja saham Indonesia di Januari 2016?

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On 27 December 2015, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website over the last seven days. Most of the topics involve economic matters such as Indonesia's 8th economic stimulus package, inflation, how to set up a legal entity in Indonesia (for foreign investors), updates on Indonesia's coal, cocoa and geothermal industries, and more.

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Indonesian inflation may reach 2.9 percent year-on-year (y/y) only in full-year 2015, the lowest level since 2009 when inflation in Southeast Asia's largest economy was recorded at 2.78 percent (y/y). In recent years Indonesia's inflation has been volatile with peaks correlating with administered price adjustments (primarily fuel and electricity price hikes as the government is keen on limiting spending on subsidies). Another characteristic of Indonesia is that inflation is generally high (compared to advanced economies), which is in line with the higher economic growth pace (than that of advanced economies).

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Bank Indonesia, bank sentral dari negara dengan ekonomi terbesar di Asia Tenggara, mempertahankan suku bunga acuannya (BI rate) pada 7,50% pada pertemuan kebijakan di bulan Desember pada hari Kamis (17/12). Sementara itu, fasilitas simpanan Bank Indonesia (Fasbi) tidak berubah pada 5,50% dan fasilitas pinjaman di 8,00%. Ini adalah bulan kesepuluh berturut-turut Bank Indonesia tidak mengubah suku bunganya (pada bulan Februari 2015 bank sentral memangkas BI rate sebesar 0,25%).

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ICRA Indonesia, an independent credit rating agency and subsidiary of ICRA Ltd. (associate of Moody's Investors Service), publishes a monthly newsletter which provides an update on the financial and economic developments in Indonesia of the last month. In the June 2014 edition, a number of important topics that are monitored include Indonesia's inflation rate, the trade balance, the BI rate, the IDR rupiah exchange rate, and gross domestic product (GDP) growth. Below is an excerpt of the newsletter:

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Emerging currencies in Asia, led by the Indonesian rupiah exchange rate, strengthened in the past week on positive economic data from the US and China, the world’s two largest economies. Companies in the US added more jobs than expected in June 2014, while manufacturing in China grew at its fastest pace in 2014. Improving economies of the US and China are important for Asian countries as it boosts Asian exports. Moreover, Indonesian inflation and trade data contributed to positive market sentiments.

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Inflation in June 2014 increased by 0.43 percent (month-to-month, mtm) in accordance with the traditional pattern ahead of the holy fasting month of Ramadan and Idul Fitri celebrations. These occasions always trigger inflationary pressures as consumers increase spending. However, June inflation remains under control and is even lower than the historical average in June in recent years (0.56 percent mtm). On a year-on-year (yoy) basis, inflation stood at 6.70 percent, thus continuing the downward trend since the beginning of 2014.

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Head of Statistics Indonesia (BPS) Suryamin announced on Tuesday (01/07) that the number of poor people in Indonesia declined slightly to 28.28 million people (or 11.25 percent of the total population) in March 2014, from 28.60 million (11.46 percent of the total population) in September 2013. However, compared to March last year, poverty has increased by 110,000 people due to high inflation and a slowing economy; economic growth slowed to 5.78 percent in 2013 and this decline continued to 5.21 percent in the first quarter of 2014.

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The Indonesian rupiah exchange rate is appreciating sharply on Monday (30/06). By 15:13pm local Jakarta time, the currency of Indonesia had strengthened 1.31 percent to IDR 11,838 against the US dollar. Main factors that cause this performance are the weakening US dollar (as a slowdown in the US economic recovery evokes expectations that the Fed Rate will not be raised soon) and falling oil prices; the US benchmark West Texas Intermediate declined 30 cents to USD $105.44 in mid-morning trade while Brent crude fell 22 cents to USD $113.08.

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The Indonesian rupiah exchange rate depreciated 0.07 percent to IDR 12,099 per US dollar on Thursday (26/06) based on the Bloomberg Dollar Index, thus extending its recent weakening trend. This trend is expected to continue further as Bank Indonesia said it would allow rupiah depreciation in order to make the country’s exports more competitive (in an attempt to curb the current account deficit). However, this also dampens demand for Indonesian bonds. The 10-year yield rose to the highest level since February 2014.

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ICRA Indonesia, an independent credit rating agency and subsidiary of ICRA Ltd. (associate of Moody's Investors Service), publishes a monthly newsletter which provides an update on the financial and economic developments in Indonesia of the last month. In the May 2014 edition, a number of important topics that are monitored include Indonesia's inflation rate, the trade balance, the BI rate, the IDR rupiah exchange rate, and gross domestic product (GDP) growth. Below is an excerpt of the newsletter:

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On Thursday 12 June 2014 it was decided at the central bank’s Board of Governors’ Meeting to maintain the country’s benchmark interest rate (BI rate) at 7.50 percent, with the Lending Facility rate and Deposit Facility rate held at 7.50 percent and 5.75 percent, respectively. This decision is consistent with ongoing efforts to steer inflation back towards its target corridor of 4.5±1 percent in 2014 and 4.0±1 percent in 2015, as well as to reduce Indonesia’s current account deficit to a more sustainable level.

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Car sales in Indonesia declined 8 percent to 98,198 units in May 2014 from 106,811 units in the previous month. The Indonesian Automotive Industry Association (Gaikindo) said that the decline was the direct consequence of several public holidays (International Labour Day and the commemorations of Buddha’s birthday as well as ascensions of Prophet Muhammad and Jesus Christ). These holidays caused a lower car production rate and a reduced number of car deliveries to wholesale dealers.

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According to Statistics Indonesia (BPS), the country's balance of trade in April 2014 recorded a deficit of USD $1.96 billion, after having recorded a surplus of USD $0.67 billion in March. The balance of trade performance in April 2014 was particularly affected by the country's non-oil & gas balance, which turned from a surplus into a deficit, whereas a lower deficit in the oil & gas trade balance was realized (compared to March 2014). Meanwhile, inflation in May 2014 was slightly higher at 0.16 percent (mtm) from the previous month.

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