Once again, the Indonesian rupiah depreciated beyond the IDR 13,500 per US dollar level on Wednesday (05/08), touching its weakest level since the Asian Financial Crisis (which began as a financial crisis but would soon develop into a deep economic, political and social crisis in Indonesia) in 1997-1998. For some Indonesian policy makers, business players and investors the current weak rupiah therefore brings back bad memories. However, there are significant changes between conditions now and those in 1997-1998.

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There are still persistent external and internal factors that make it difficult for Indonesian stocks to rise. By 12:07 am local Jakarta time, Indonesia’s benchmark stock index (Jakarta Composite Index) was down 0.25 percent to 4,788.37 points. Meanwhile, the rupiah had appreciated 0.36 percent to IDR 13,462 per US dollar by the same time according to the Bloomberg Dollar Index. What are the external (foreign) and internal (domestic) factors that influence the performance of Indonesian assets on today’s trading day (04/08)?

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The pace of economic growth of Indonesia is expected to remain below five percent year-on-year (y/y) in the second quarter of 2015 according to Reuters poll involving 22 analysts. In fact, the poll shows that further slowing economic growth is expected. In the first quarter of 2015, Indonesia’s economic growth came at 4.71 percent (y/y), the weakest growth pace in six years. According to the poll, analysts see a gross domestic product (GDP) growth rate of 4.61 percent (y/y) in the second quarter of 2015.

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Although consumer confidence among Indonesian consumers remained relatively high, there has been a decline detected in 2015. Consumer optimism has fallen as Indonesia’s economy is growing at its slowest pace in six years due to worldwide low commodity prices (giving rise to Indonesia’s weak export performance), China's economic slowdown, uneven recoveries in the US and Europe, while spending of the Indonesian government remained weak (amid bureaucratic hurdles and difficult land acquisition for projects).

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Again, Indonesia’s rupiah is touching the IDR 13,400 per US dollar psychological boundary. According to the Bloomberg Dollar Index, Indonesia’s currency had depreciated 0.22 percent to IDR 13,405 per US dollar at 11:22 am local Jakarta time on Thursday (23/07), a level last seen when the country was still plagued by the Asian Financial Crisis in 1998. Crossing the psychological boundary could mean Indonesia’s central bank (Bank Indonesia) will intervene again to support the currency in order to safeguard people’s confidence in the currency.

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The Asian Development Bank (ADB) announced that it cut its 2015 and 2016 economic growth forecasts for both China and other developing Asian countries due to the persistent economic slowdown in the world’s second-largest economy. China’s economic expansion is projected to reach 7 percent (y/y) in 2015 and 6.8 percent (y/y) in 2016. Both these outlooks were down 0.2 percentage point from the ADB’s previous projection. Due to the size of China’s economy, economic slowing will drag down growth in the whole Asian region.

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As expected Indonesia's central bank (Bank Indonesia) refrained from adjusting its interest rate regime at Tuesday’s Board of Governor’s meeting (14/07). The key BI rate was kept at 7.50 percent, while the overnight deposit rate (Fasbi) and lending facility rate were left at 5.50 percent and 8.00 percent, respectively. Bank Indonesia believes that the current interest rate environment is in line with its efforts to bring down inflation while supporting Indonesia’s ailing rupiah ahead of expected further monetary tightening in the USA later this year.

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In line with expectation and the historic trend, Indonesia’s car sales rose - on a monthly basis - in June 2015 ahead of the Idul Fitri celebrations (that mark the end of the Islamic holy fasting month). Car sales in Indonesia usually increase ahead of Idul Fitri (also known as Lebaran), a tradition which involves the exodus of millions of Indonesians from the cities to their places of origin. Before the journey to the villages a portion of these travelers are eager to buy a new car, a decision often influenced by promotional campaigns and discount programs.

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The International Monetary Fund (IMF) cut its forecast for global economic growth in 2015 to 3.3 percent (y/y), from 3.5 percent (y/y) previously, as the harsh winter impacted on the US economy and drags down global growth accordingly. In the first quarter of 2015, the US economy contracted 0.2 percent (y/y). Moreover, turmoil in Greece and China cause great volatility on international financial markets, the Washington-based institution said in an update to its World Economic Outlook (WEO) on Thursday (09/07).

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The World Bank cut its forecast for economic growth in Indonesia in 2015 from 5.2 percent year-on-year (y/y) to 4.7 percent (y/y) as private consumption, which accounts for about 55 percent of total economic growth in Indonesia, is estimated to weaken further in the second half of 2015 while government spending has been lower than expected (causing subdued fixed investment). Furthermore, persistent low commodity prices and tighter credit conditions provide further pressures that led to the extreme downward revision.

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The novel coronavirus (COVID-19) crisis has a wide range of economic and social consequences. For example, the Indonesian economy is likely to contract this year (for the first time since 1998), while millions of Indonesians have lost their jobs over the past three months, and the majority of the country’s enterprises have seen their sales plunge.

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On 5 May 2020 Statistics Indonesia (Badan Pusat Statistik, BPS), a non-departmental government agency, released the first quarter gross domestic product (GDP) data of Indonesia for the year 2020. These data were highly anticipated as policymakers, analysts, and stakeholders are particularly interested in finding out to what extent damage has been done to the Indonesian economy by the self-imposed restrictions.

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The economic and social consequences of the COVID-19 crisis are becoming increasingly clear and frightening. All the self-imposed restrictions on business and social behavior, taken by governments across the world, may protect people’s health to a significant extent, but the policy measures also have devastating economic and social consequences as economic activity nosedives, and businesses collapse. This results in unprecedented mass layoffs as well as growing poverty.

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In mid-April 2020 the International Monetary Fund (IMF) released its latest ‘World Economic Outlook’ report. It is in fact not a complete report. Considering the global economy has changed dramatically over the past months, the IMF’s previous update of the World Economic Outlook (released in January 2020) simply had no validity anymore, and therefore the IMF released one new chapter in mid-April 2020 (with the full report set to follow in May 2020).

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The number of confirmed novel coronavirus (COVID-19) infections and fatalities have been growing steadily across Indonesia in recent weeks, especially in the capital city of Jakarta where around half of the country's total COVID-19 cases originate from. And the alarming matter is that this could very well be the beginning of the real storm.

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As expected, Indonesia’s full-year 2019 economic growth came in well below the central government’s 5.3 percent year-on-year (y/y) growth target. Based on the data that were released by Statistics Indonesia (Badan Pusat Statistik, BPS) in early February 2020, the Indonesian economy expanded at a pace of 5.02 percent (y/y) in 2019.

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What marked the year 2019 for Indonesia was national politics. Although in these present times each year feels like a ‘political year’ for Indonesia – as the country’s local elections are spread out across years (and in 2020 it will be the turn of voters in various parts of the Archipelago to elect nine governors, 224 regents and 37 mayors) – the year 2019 was in fact a particularly ‘huge political year’ for Indonesia because of the (general) presidential and legislative elections that were held on 17 April 2019.

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Given a variety of recent events, Indonesia has seemingly entered a liminal phase in its development trajectory, suggesting that its economic vulnerability will be tested in new ways. The present circumstances should be understood as a particular test for the ability of policy initiatives to temper the effects of perturbing exogenous factors and demand shocks to the overall economy.

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In early May 2019 Indonesia’s statistics agency (in Indonesian: Badan Pusat Statistik, or BPS) announced that the nation’s economic growth pace was recorded at 5.07 percent year-on-year (y/y) in the first quarter of 2019.

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Indonesia’s stock market continues to struggle in attempts to find a bottom, as recent declines have been propelled by lower-than-expected GDP figures. For the first quarter, annualized growth of rates of 5.07 percent indicated a slight miss relative to the consensus estimates for the period (5.18 percent). Primary weaknesses were seen in export markets, where slowing demand for key commodities (such as coal and palm oil) indicated contraction for the first time since 2016.

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