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Indonesia likely to witness further pick-up in 2017 and 2018, driven by higher public investments: Fitch Ratings

Indonesia’s GDP grew 5.0 percent in 2016, only slightly below what Fitch expected in its last GEO. Growth edged up a bit higher in 2016 as headwinds from activity in commodity-related sectors started to fade.

Iron ore mining increased 1.8 percent in 2016 after dipping 10.7 percent in 2015. Domestic demand remained well balanced with private consumption and investment growing at a similar pace. However, Indonesia’s external trade remained weak, with both export and import volumes contracting for the second year in a row, Fitch Ratings reported.

Domestic demand was supported by an accommodative monetary policy stance. The Bank of Indonesia cut the benchmark interest rate six times in 2016, by a total of 150 basis points. Credit did not pick up (as banks’ willingness to lend has been constrained by rising non-performing loans), but lower interest payment encouraged spending. In addition, low inflation boosted households’ real income and supported consumption.

"We expect some further pick-up in growth in 2017 and 2018, mainly driven by public investment and the lagged effect of monetary policy easing of the past year," the report commented.

Meanwhile, the stepped-up structural reform effort should also support business investment. Activity in commodity-related sectors (such as iron ore and coal) should hold firm given the recent recovery in global commodity prices.

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Fintech Week Chicago

April 27 19:00 UTC Released

ARIndustrial Output NSA*

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-0.4 %

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-3 %

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-6 %

April 27 15:00 UTC Released

SAPvt Sector Loans YY*

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-0.1 %

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0.3 %

April 27 21:00 UTC 2020m

KRBOK Manufacturing BSI*

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78 bln $

April 27 23:00 UTC 140140m

KRService Sector Output Gr*

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0.1 %

April 27 23:00 UTC 140140m

KRIndustrial Output YY*

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3.7 %

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6.6 %

April 27 23:00 UTC 140140m

KRIndustrial Output Growth*

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2.0 %

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-3.4 %

April 27 23:01 UTC 141141m

GBGfK Consumer Confidence

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-7 %

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-6 %

April 27 23:30 UTC 170170m

JPAll Household Spding YY*

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-0.3 %

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-3.8 %

April 27 23:30 UTC 170170m

JPAll Household Spending MM*

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-0.8 %

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2.5 %

April 27 23:30 UTC 170170m

JPCPI, Core Nationwide YY

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-0.2 %

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-0.4 %

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