Bank Indonesia (BI) reported a balance of payments (BoP) surplus of USD8.6 bn in 4Q23, a sharp turnaround from the previous quarter's deficit of -USD1.5 bn. This surplus is the highest since 3Q21. The BoP surplus was mainly driven by a widening capital and financial account surplus, while the current account deficit remained low.
According to Statistics Indonesia (BPS), Indonesia's trade surplus dipped by -1.27% MoM and -1.87% YoY to USD2.02 bn in Jan-24 (vs. USD3.31 bn in Dec-23), marking the lowest trade surplus since June-23.
According to Statistics Indonesia (BPS), the monthly inflation rate decelerated to 0.04% MoM in Jan-24 (vs. 0.41% MoM in Dec-23), marking the slowest monthly inflation rate since Aug-23.
Global economic growth, which is on a slowing trend in 2023, is expected to improve slightly in 2024.
In terms of consumption, the Health and Social Activity component of GDP continues to attract attention, growing 8.3% YoY in 2Q23, coupled with a lower healthcare inflation rate.
The global palm oil market size is expected to reach USD100 bn by 2030, expanding at 5.1% CAGR from 2023 to 2030.The growth is driven by increasing demand for food applications and eco-friendly, organic, and sustainable products.
The government has been relying on massive infrastructure to achieve ambitious GDP growth target since President Jokowi took office in 2014. The country needs better transport links such as railways, airports, toll roads as well as energy supplies, and such projects promise long-term economic benefits.
Demand for residential property remained soft in 1H23 where sales mainly were seen for the low to middle segment which offers affordable price units. Home purchase still mostly dominated by end users especially for landed housing.
Indonesia digital economy value is expected to grow almost 5x from 2021-2030F from the value of USD70 mn in 2021 to USD330 mn in 2030F. Supported by its young demographic and rising smartphone penetration, Indonesia is the largest digital economy market in South East Asia with one of the fastest growths in the region.
London Metal Exchange (LME) Nickel prices have steadily declined by 39.6% Ytd to USD18,450/ton, whilst China NpI prices have also declined 14.9% Ytd to USD13,830/ton.
Thermal coal prices have disappointed investors so far this year, falling steadily before settling. At the time of writing, the benchmark Newcastle thermal coal price was down 65.6% YTD to USD 139.0/ton.
Expect election year to aid consumption growth. Despite economic headwinds and pandemic of the past few year, but we held more optimistic outlook as we enter 2024 with inflation and unemployment rate figure are expected to continue decrease.
Banking industries have continued to deliver compelling profitability, with earnings growing by 14% annually since the pre-pandemic period.
In YTD 2023, competition has been stabilizing for telecommunication (telco) industry and we foresee the trajectory to remain positive for at least a few more quarters.
The first nine months of 2023 have been one of a roller coaster ride first on the downside and then on the upside (Exhibit 23). Indonesia equity markets began 2023 on a weak note.
According to Statistics Indonesia (BPS), the monthly inflation rate in October slowed to 0.17% MoM, lower than the previous month's 0.19% MoM. This came in below both our projection of 0.18% MoM and the consensus estimate of 0.20% MoM.
The current interest rate level is adequate for maintaining Rupiah stability, so we expect BI to retain the interest rate at 6.00% until the end of the year. Furthermore, we also anticipate that BI will cut the interest rate next year to 5.00%, in line with the easing of global uncertainty.
Indonesia has sustained a positive trend in international trade since May 2020, resulting in 41 consecutive months of trade surplus. Looking ahead, it is expected that export performance will continue to deteriorate due to declining commodity prices, a result of reduced global demand.
The primary factor behind this inflation was the food, beverage, and tobacco basket, which contributed 0.09% MoM to the inflation rate. Besides, the transportation group displayed the second highest growth. This pattern aligns with the government intervention, which increased the price of non-subsidized fuels such as Pertamax, Pertamax Turbo, Dexlite, and Pertamina Dex.
In contrast, imports are poised to outpace exports, driven by the sustained strength of the domestic economy. As a result, our forecast points to a further narrowing of the trade surplus, with the possibility of the balance turning into a deficit.
Volatile food prices demonstrated a deflation rate of -0.51% MoM, marking a decline from July's 0.17% MoM increase. Meanwhile, administered prices experienced a deceleration to -0.02% MoM, in contrast to a rate of 0.44% MoM in the previous month.
The triple intervention refers to the BI interventions in the spot, Domestic Non-Deliverable Forwards (DNDF), and government securities (SBN) markets. Rupiah was reported at Rp15,325/USD as of 21 August-23, higher than the macroeconomic assumption on APBN 2023 at Rp14,800/USD.
Imports are projected to outperform exports, propelled by the enduring strength of the domestic economy. As a consequence, our forecast indicates a further decrease in the trade surplus and the possibility of the balance shifting into a deficit.