Indonesian Finance Minister Sri Mulyani Indrawati believes economic growth of Indonesia in 2017 can exceed the target that was set by the central government in the state budget. While the official target in the 2017 State Budget was set at 5.1 percent year-on-year (y/y), Sri Mulyani expects to see the growth rate at 5.2 percent (y/y) on the back of rising consumption and investment, while she predicts an end to the trend of falling imports and exports.

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Indonesian banks are expected to be cautious boosting credit disbursement in the next couple of quarters because the non-performing loan (NPL) ratio is currently high with the gross NPL ratio hovering above 3 percent since mid-2016, approximately the same level as it was in 2011 when Indonesia's five-year economic slowdown commenced. Although various external and internal matters were to blame for Indonesia's 2011-2015 economic slowdown, the high NPL ratio today can undermine economic acceleration as credit growth is curbed.

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The Asian Development Bank (ADB) kept its forecasts for economic growth in Indonesia at 5.1 percent (y/y) in 2017 and 5.3 percent (y/y) in 2018, implying it expects the trend of accelerating economic growth in Southeast Asia's largest economy to continue. The Manila-based institution mentions improvement in private investment and trade (namely expectation of rising exports) as main sources for growth of Indonesia's gross domestic product (GDP) in the years ahead.

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Colliers International Indonesia, a leading commercial real estate consultancy, expects to see an improvement in the residential property sector of Indonesia in 2017, particularly in the capital city of Jakarta, after this sector experienced two weak years previously. In terms of sales and price increases, apartments are most the promising property object this year according to analysts.

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According to the World Bank the economy of Indonesia will continue to accelerate in 2017 supported by strengthening global economic growth, overall rising commodity prices (meaning investment and export performance should improve), the nation's low current account deficit, low inflation, and strong fundamentals of the Indonesian economy. These circumstances should boost Indonesia's gross domestic product (GDP) growth to 5.2 percent year-on-year (y/y) in 2017 (from 5.0 percent in the preceding year).

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The central bank of Indonesia cut its outlook for Indonesia's economic growth in the first quarter of 2017. Earlier, the lender of last resort estimated Indonesia's Q1-2017 gross domestic product (GDP) at 5.05 percent year-on-year (y/y). Although the new growth projection has not been unveiled yet, Bank Indonesia Governor Agus Martowardojo said it sees GDP growth now below 5.05 percent (y/y) in the first quarter of the year.

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Passenger car sales in Indonesia are estimated to rise 11.5 percent per year in the 2017-2021 period supported by Indonesia's expanding middle class. This conclusion originates from research that was conducted by London-based BMI Research. Meanwhile, business consulting firm Frost and Sullivan sees Indonesian car sales rise 5 percent (y/y) to 1.11 million vehicles in 2017 supported by the popular low cost green cars and multipurpose vehicles.

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In 2016 Indonesia was the third-largest Asian country in terms of modern retail sales growth after India and China. Last year Indonesia's modern retail sales expanded 10 percent to IDR 200 trillion (approx. USD $15 billion). Roy Nicholas Mandey, Chairman of the Indonesian Retailers Association (Aprindo), said Indonesia remains an attractive country for retailers due to the enormous size of the population. Moreover, due to economic growth this population constitutes a strengthening consumer force. Lastly, Indonesians are known as people who are eager to try and buy new products.

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There is concern about Indonesia's tax buoyancy. Tax buoyancy is the indicator that measures efficiency and responsiveness of revenue mobilization in response to growth in gross domestic product (GDP) or national income. While, Indonesia's GDP accelerated 5.02 percent (y/y) in 2016, the country's tax revenue realization only rose 4.2 percent (y/y) to IDR 1,104.9 trillion (approx. USD $83.1 billion). Since 2011 (when commodity prices plunged heavily) tax buoyancy has been weakening in Indonesia.

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Investment in Indonesia is expected to rise in 2017. This covers both direct investment and portfolio investment. Domestic direct investment (DDI) should grow on the back of Indonesia's low interest rate environment (making it cheaper for domestic investors to purchase credit) as well as higher capital injections (from the state budget) into Indonesia's state-owned enterprises. Meanwhile, foreign direct investment (FDI) is expected to rise on the back of Indonesia's accelerating economic growth and government reforms. Both FDI and DDI should also rise amid rising commodity prices.

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Forecasts for Indonesia’s gross domestic product (GDP) growth in 2013 and beyond have been revised down by all institutions, including the Indonesian government and central bank as well as international organizations such as the World Bank and the International Monetary Fund (IMF). Initially, the country’s economic growth was expected to reach around 6.5 percent in 2013. However, most institutions have downgraded forecasts for the country’s economic growth to below the 6.0 percent mark.

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Car sales in Indonesia are expected to exceed the target set by the Indonesian Automotive Industry Association (Gaikindo) in 2013. The institution originally set a target of 1.1 million sold car vehicles in 2013, which is similar to the sales result in 2012. However, in September 2013 car sales recorded a new monthly record (115,921 sold units) after consumers sped up car sales as prices will increase in October. Up to the third quarter of 2013, total car sales have increased 11.2 percent compared to the same period last year.

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Bank Indonesia’s Board of Governors decided to hold the BI Rate at a level of 7.25 percent, with rates on the Lending Facility and Deposit Facility held respectively at 7.25 percent and 5.50 percent. Bank Indonesia will continue to monitor global and domestic developments and further synergise the monetary and macroprudential policy mix in order to ensure that inflationary pressures remain under control, that rupiah exchange rate stability is maintained according to its fundamentals and the current account deficit is reduced to a sustainable level.

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After a decade of high growth and a swift rebound after the collapse of US investment bank Lehman Brothers, emerging markets are seeing slowing growth. Their average growth is now 1½ percentage points lower than in 2010 and 2011. This is a widespread phenomenon: growth has been slowing in roughly three out of four emerging markets. This share is remarkably high; in the past, such synchronized and persistent slowdowns typically have only occurred during acute crises.

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Softer than expected economic activity in the People’s Republic of China (PRC) and India and jitters over the United States (US) quantitative easing (QE) program will weigh on Asia and the Pacific’s growth prospects in the near term, says a new Asian Development Bank (ADB) report. “Asia and the Pacific's 2013 growth will come in below earlier projections due to more moderate activity in the region’s two largest economies and effects of QE nervousness,” said ADB Chief Economist Changyong Rhee.

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Growth rates in Indonesia in 2013 and 2014 will fall below earlier projections, highlighting the need to continue improving the country’s competitiveness in manufactured exports, says the Asian Development Bank (ADB) in an update of its flagship annual economic publication, Asian Development Outlook 2013. ADB revised down its 2013 gross domestic product (GDP) growth forecast for Indonesia to 5.7% from 6.4% seen in April. For 2014, growth will also be adjusted to 6.0% from the previous estimate of 6.6%.

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After three months of high monthly inflation rates, Indonesia's inflation eased in September due to falling prices of food, transportation, communications and financial services after the Muslim celebrations of Idul Fitri, which always cause a spike in inflation, have passed. In September 2013, Indonesia posted deflation of 0.35 percent. It was the first time in 12 years that the country posted deflation in this month. The annual inflation rate eased to 8.40 percent from 8.79 percent in August 2013.

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Investors are eagerly waiting for the release of Indonesia's September inflation rate. Indonesia has been hit by high inflation since the government decided to increase prices of subsidized fuels at the end of June. High inflation limits its people's purchasing power and as domestic consumption accounts for about 55 percent of Indonesia's economic growth, it thus impacts negatively on GDP growth, particularly after Bank Indonesia raised its benchmark interest rate (BI rate) from 5.75 to 7.25 percent between June and September.

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The slowdown of Indonesia's economic growth is expected to continue into the third quarter of 2013. The Indonesian government predicts that economic growth will fall below the GDP growth figure realized in the second quarter (5.8 percent). Acting Head of the Fiscal Policy Agency Bambang Brodjonegoro stated that the main factor that causes the country's slowing economic growth in Q3-2013 is reduced household consumption. Domestic consumption in Indonesia accounts for about 55 percent of the country's GDP growth.

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On Thursday (19/09), most currencies and stock indices outside the USA were bullish after the Federal Reserve decided to continue its massive monthly USD $85 billion bond buying program. Today (20/09), Asian currencies and stock indices took the foot off the gas as many investors sought to cash in on yesterday's gains. The MSCI Asia Pacific was still able to rise slightly (0.1 percent) after jumping 2.2 percent yesterday, but Indonesia's benchmark stock index (IHSG) plunged 1.86 percent (after gaining 4.65 percent yesterday).

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