On 25 December 2016, 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 political, social and economy-related topics such as the performance of Indonesian stocks and the rupiah, infrastructure, radical Islam, palm oil, inflation, credit ratings, the visa-free facility, and more.

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The central bank of Indonesia (Bank Indonesia) expects inflation to reach the range of 0.50-0.60 percent month-on-month (m/m) in December 2016 as Christmas and New Year celebrations, traditionally, give rise to higher consumer spending. The projection would also imply that full-year inflation will fall well within Bank Indonesia's target range of 3.0 - 5.0 percent (y/y) in 2016 (year-to-date, Indonesian inflation has accumulated to 2.59 percent), the second straight year of mild inflation (for Indonesian standards).

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Inflation in Indonesia accelerated to 3.58 percent year-on-year (y/y) in November 2016, from 3.31 percent (y/y) in the preceding month. Acceleration of Indonesian inflation last month was faster than expected, with estimates averaging 3.43 percent (y/y). On a month-on-month (m/m) basis inflation rose by 0.47 percent in November. Indonesia's Statistics Agency (BPS) announced the country's latest inflation data just before noon on Thursday (01/12).

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Statistics Indonesia (BPS) announced that inflation in Indonesia was recorded at 0.14 percent month-on-month (m/m) in October 2016, slightly higher than had been expected by analysts but lower compared to the 0.22 percent (m/m) of inflation that was reported in the preceding month. Meanwhile, on an annual basis (y/y), Indonesia's inflation rate accelerated to a seasonally adjusted 3.31 percent (y/y) in October, from 3.07 percent (y/y) in the preceding month.

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According to the latest survey of Indonesia's central bank (Bank Indonesia), consumer confidence in Southeast Asia's largest economy fell 3.3 points to 110 in September 2016 (a reading above 100.0 indicates optimism). Consumer confidence somewhat weakened as the Indonesian people expect upward price pressures at the year-end, specifically rising prices of processed food, beverages, cigarettes, tobacco and groceries. Meanwhile, respondents also expect to put less money in savings in the next six months.

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Indonesia's consumer price index (CPI) expanded 3.07 percent year-on-year (y/y) in September, up from the 2.79 percent (y/y) pace in the preceding month but remaining at a comfortably low level (for Indonesian standards). According to data from Statistics Indonesia (BPS), released earlier this morning (03/10), Indonesia's monthly inflation rate was 0.22 percent in September 2016, roughly in line with analysts' forecasts and the low inflation environment could be a reason for the central bank to cut its key interest rates again later this year.

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The central bank of Indonesia (Bank Indonesia) stated that up to the third week of August deflation reached 0.06 percent month-to-month (m/m). Juda Agung, Executive Director at Bank Indonesia's Economic and Monetary Policy Department, said consumer demand has diminished after previously peaking during the Islamic Ramadan and Idul Fitri celebrations in June and July. Usually the month of August sees inflationary pressures (caused by the new school year). This year, however, it may be the first time in many years that August brings deflation.

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After six years of steady decline, the Indonesian rupiah is likely to have appreciated against the US dollar at the end of 2016. So far this year, the currency of Indonesia has appreciated 4.8 percent to IDR 13,126 against the greenback (Bloomberg Dollar Index) supported by capital inflows, particularly into government bonds and stocks as well as the delay in further monetary tightening in the USA. Although the rupiah should depreciate a bit as we go towards the end of the year, it is set to finish the year at a stronger level than it started.

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On 7 August 2016, 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 Q2-2016 GDP growth result, July inflation and manufacturing, the tax amnesty program, coal mining, monetary and fiscal policies, the tobacco industry, and much more.

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Statistics Indonesia (BPS) announced on Monday (01/08) that Indonesia's inflation rate reached 0.69 percent (m/m) in July 2016, considerably below analysts' forecasts. In fact, the 0.69 percent (m/m) pace is Indonesia's lowest July inflation rate since 2012. On a year-on-year basis, Indonesian inflation eased to a seasonally adjusted 3.21 percent (y/y), from 3.45 percent (y/y) in the preceding month. Meanwhile, Indonesia's manufacturing activity plunged unexpectedly in July.

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Last week, I discussed the composition of the ten largest Indonesian companies by market capitalization. For this week's column I have decided to zoom in on the performance of Indonesia's main stock index (IHSG), which has been highly volatile in the last week. It seems like its trend for the upcoming short-term has changed from an upward into a sideward trend. While the Dow Jones Index has been setting new records, the IHSG is showing some signs of fatigue.

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Rising American stock indices on Wednesday provided solid support for stock indices around Asia the following day, including Indonesia's main index (IHSG). Amid this global positivity, market players were eager to add stocks to their portfolios. News from Japan, China and the Indonesian central bank's announcement to maintain its low benchmark interest rate were well-received, particularly by domestic market players. It made the IHSG rise to 4,924.26, a 0.96 percent gain.

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The central bank of Indonesia (Bank Indonesia, or BI) decided to maintain its record low policy rate for the 15th straight month at 5.75 percent as it is considered consistent with its inflation target range of 3.5-5.5 percent in 2013 and 2014. The central bank also stated that the global economic recovery is accompanied by many uncertainties which result in a lower forecast for Indonesia's economic growth. The full press release of Bank Indonesia can be read below.

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In its most recent report, the Asian Development Bank (ADB) forecasts Indonesia to continue its robust economic growth. Last year, the economy of Indonesia expanded 6.23 percent, and according to the ADB this figure will rise to 6.4 percent in 2013 and 6.6 percent in 2014. However, since the start of April there have been some issues that are causing Indonesia's stock indices to go down. Although believed to be only temporary, it is worth taking a closer look.

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Various high government officials, including president Susilo Bambang Yudhoyono, Finance minister Agus Martowardojo and National Development Planning minister Armida Alisjahbana stated that Indonesia's economy is estimated to grow between 6.3 and 6.8 percent in 2014. Its main economic pillars of support are thought to be (foreign and domestic) investments, domestic consumption, and government expenditure. Poverty is targeted to be reduced to ten percent of the population.

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The Indonesia Stock Exchange (IHSG) experienced a mixed week. At the start of the week, the index rose, but towards the end of the week it weakened, although ending in the green on Friday. Recently, the IHSG has hit record levels, and this makes market participants worried that the index might fall in case there emerge negative market sentiments. These concerns are what made the index turn away from the next psychological boundary: 5,000 points.

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Usually, news about inflation is not well-received by market participants. Particularly when inflation turns out to be higher than expected. This time, however, something interesting happened in Indonesia. Although the country's March inflation rate was high (5.90 percent year-on-year), it was not followed up by a negative response of market players. In fact, the inflation rate seems to have strengthened the Indonesia Stock Exchange (IHSG), which gained 0.40 percent on Tuesday.

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With a number of important global stock exchanges still closed due to Easter, it seemed that the Indonesia Stock Exchange (IHSG) lacked a reference point to which it could cling. It is also likely that market participants have already consumed most of the 2012 corporate company reports and are therefore not waiting for new data of listed companies. Moreover, today's announcement of the relative high inflation rate of March did not support the IHSG either.

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Yesterday, Statistics Indonesia (BPS), a non-departmental government institution, released Indonesia's export and import numbers of February 2013. Indonesia's imports reached US $15.32 billion, while its exports stood at US $14.99 billion. It has thus resulted in the continuation of a trade deficit (US $327.4 million). For Indonesia, which always reported trade surpluses until last year, it is a worrying scenario as the trade deficit and higher inflation put pressure on the IDR rupiah.

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This week, the World Bank published its Indonesia Economic Quarterly (IEQ, edition March 2013) titled 'Pressures Mounting'. It reports on key developments over the past three months in Indonesia’s economy, and places these in a longer-term and global context. To read the whole report, please visit the World Bank's website at www.worldbank.org or download this edition directly through this link. Below we present the executive summary.

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