Indonesia Q4 GDP growth faster than expected

[Indos]

Indonesia posts over 5.9 billion USD budget surplus in January​

February 22, 2023

JAKARTA, Feb. 22 (Xinhua) -- The Indonesian government announced on Wednesday that the country has recorded an unexpected budget surplus of 90.8 trillion rupiahs (about 5.97 billion U.S. dollars) in January.

"January's budget surplus shows a positive state budget performance and can support recovery," Finance Minister Sri Mulyani Indrawati said at a virtual conference on Wednesday.

A budget surplus takes place when tax revenue received is larger than government spending.

In January last year, the Southeast Asian country had a budget surplus of 29.6 trillion rupiahs, while in the same month in 2021, when the pandemic hit the country badly, it recorded a deficit of 45.5 trillion rupiahs.

According to the minister, the surplus was mainly owed to a significant increase in state revenue, which was up 48.1 percent year-on-year to 232.2 trillion rupiahs, while the government's spending rose by 11.2 percent to 141.4 trillion rupiahs. (1 U.S. dollar equals 15,202 rupiahs)

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http://www.china.org.cn/world/Off_the_Wire/2023-02/22/content_85122215.htm

 

[Indos]

 

[Indos]

Indonesia posts over 5.9 billion USD budget surplus in January​

February 22, 2023

JAKARTA, Feb. 22 (Xinhua) -- The Indonesian government announced on Wednesday that the country has recorded an unexpected budget surplus of 90.8 trillion rupiahs (about 5.97 billion U.S. dollars) in January.

"January's budget surplus shows a positive state budget performance and can support recovery," Finance Minister Sri Mulyani Indrawati said at a virtual conference on Wednesday.

A budget surplus takes place when tax revenue received is larger than government spending.

In January last year, the Southeast Asian country had a budget surplus of 29.6 trillion rupiahs, while in the same month in 2021, when the pandemic hit the country badly, it recorded a deficit of 45.5 trillion rupiahs.

According to the minister, the surplus was mainly owed to a significant increase in state revenue, which was up 48.1 percent year-on-year to 232.2 trillion rupiahs, while the government's spending rose by 11.2 percent to 141.4 trillion rupiahs. (1 U.S. dollar equals 15,202 rupiahs)

Follow China.org.cn on Twitter and Facebook to join the conversation.

http://www.china.org.cn/world/Off_the_Wire/2023-02/22/content_85122215.htm

AlhamduliLLAH, good start for this year

More data

Indonesia Economic growth (2016-2022)

GDP per-capita, GDP current prices, GDP constant prices

 

[Indos]

 

[Indos]

Indonesia: Looking to consumption to carry the load​

A more challenging global landscape means Indonesia will look to domestic consumption to bolster growth aspirations in 2023
In this article

• Economic growth
• Exports and the external balance: fading commodity boom
• Consumption here to save the day? Depends on inflation
• BI now in the mood to support growth, but does it have the space?
• Policy uncertainty as attention shifts to 2024 election
• Market outlook: IDR pressured, rates on hold and growth likely to slow from last year

Jakarta, Capital of Indonesia

Article

9 March 2023
By
Nicholas Mapa


Indonesia’s economy grew by 5.3% in 2022, which was the fastest pace of expansion in almost a decade. Economic growth was underpinned by robust household spending as well as a healthy dose of manufacturing and exports. Domestic consumption was brisk with Covid-19 restrictions fully eased and headline inflation staying relatively well-behaved in the first half of the year. Meanwhile, Indonesia’s export sector benefited from the commodity price rise in 2022 as demand for energy and oil increased due to the fallout from the Ukraine war. Surging exports in turn helped support domestic manufacturing, which boosted growth further.

Economic growth​

Indonesia is expected to churn out another solid growth performance in 2023, however challenges to the outlook have surfaced. The Bank of Indonesia (BI) expects growth to settle at the upper end of the forecast range of 4.5-5.3%, banking on private consumption, investments and exports to match last year’s growth. Given our expectation of a sustained moderation in commodity prices, we believe Indonesia will need to rely more heavily on household consumption and investment outlays to do the heavy-lifting as the boost from exports fades.

Exports and the external balance: fading commodity boom​

The glow from the 2022 commodity boom had faded by the fourth quarter of 2022 and this development will likely impact Indonesia’s external position while also having a negative impact on manufacturing activity. Global prices for coal and palm oil, two of the major exports in Indonesia, have fallen sharply from their 2022 highs which would translate to more modest export growth and trade surpluses. Indonesia’s record trade surplus coincided with sharp price increases for these commodities which also helped deliver the highest current account % of GDP ratio (1.05%) since 2010.

On top of its impact on the external balance, fading export flows may also impact economic growth by way of weaker mining and manufacturing activity. Mining and related industrial activity (oil and gas refinery) accounts for 9.1% of total GDP and softer demand for exports could also weigh on economic activities related to the mining and refining of these export products.

Mineral fuels and oils account for 37% of total exports​

Commodity boom not likely in 2023​

Consumption here to save the day? Depends on inflation​

With the boon from the export sector fading this year, Indonesia will be looking to domestic consumption to deliver the bulk of growth. The outlook for domestic consumption does have some upside after inflation appears to have peaked in late 2022. Headline inflation slowed to 5.5% year-on-year as of February (vs the 6% peak) while core inflation moved closer to target at 3.1%YoY.

Despite inflation coming down from its peak, however, price pressures remain evident with inflation still quite high for major items such as food (7.2%YoY), transport (13.6%) and utilities (3.4%). If headline inflation does eventually slow, this development could be supportive of household spending (53% of economic activity last year) and growth momentum overall.

One economic variable we will be watching carefully to approximate domestic consumption is retail sales. Retail sales, which had been relatively healthy in the first half of 2022, showed signs of slowing when faced with the sharp uptick in prices. If inflation does continue to slide this year, retail sales could potentially recover and provide some lift to overall growth. If inflation fails to slow, however, we could see only modest gains in retail sales with household spending only partially able to compensate for softer export receipts and weaker mining and manufacturing activity.

Inflation moderates somewhat, dips from peak of 6%​

Improvement in retail sales dependent on inflation trajectory​

BI now in the mood to support growth, but does it have the space?​

Faced with accelerating inflation in late 2022, BI had little choice but to join fellow regional central banks in hiking rates aggressively. The central bank rattled off a string of aggressive tightening in the second half of last year, lifting policy rates by a total of 225bps to steady the Indonesian rupiah (IDR) and combat inflationary pressures.

However, after seeing inflation moderate, BI Governor Perry Warjiyo declared victory over inflation and left policy rates untouched at the 16 February meeting. Warjiyo went so far as to indicate that he need not hike rates for the rest of the year suggesting that the current policy rate of 5.75% will be the peak for this tightening cycle. Dovish commentary from Warjiyo clearly shows that BI is now shifting its focus to bolstering growth to help offset the challenging global landscape.

Industry trends show that bank lending growth remained healthy despite the aggressive 225bps worth of tightening from BI and investment outlays could very well be a source of growth this year. Lending activity may have been supported by BI’s “macroprudential policies” such as the 0% downpayment for automotive loans, and looser loan-to-value ratios for property lending among others.

Furthermore, at least so far, growth in bank lending appears to have come without any detrimental impact on quality as the latest non-performing loan ratio slipped to 2.4%, the lowest since the start of the pandemic. Sustained economic expansion and the end of BI’s rate hike cycle bode well for bank lending, but with BI likely prevented from cutting policy rates further, the upside for capital formation may face some constraints.

​

Loan growth not at the expense of quality. Can it be sustained?​

Bank Indonesia

Policy uncertainty as attention shifts to 2024 election​

This could prove to be a pivotal year as this will be the last full year of President Jokowi with the presidential election fast approaching in February 2024. Indonesia’s elections will go ahead as planned despite a recent court ruling postponing the polls for two years.

Current polls show no clear-cut favourites with three names surfacing as potential successors to Jokowi. General Subianto (Gerindra party) who lost to Jokowi in 2014, Java Governor Ganjar (PDI-P) and forever Java Governor Anies (independent) are all still very much in the race. Very recently, Anies was nominated by three major parties with the incumbent PDI-P still yet to nominate their candidate. We believe attention will shift to the presidential elections with not much reform or legislation likely to take place between now and February 2024.

Market outlook: IDR pressured, rates on hold and growth likely to slow from last year​

Indonesia is set to post another year of decent growth in 2023 although challenges, especially on the external front, suggest that the pace of expansion could slow from last year. The economy will be missing the boost coming from the export sector as global demand fades, impacting both net exports and the mining sector's contribution to overall GDP growth.

Slower export receipts suggest a weaker external balance with the current account possibly slipping back into negative territory. A current account in deficit means that the IDR will face pressure throughout the year and the currency will likely lag any regional rally.

Meanwhile, fresh from declaring victory over inflation, we believe BI will be hard-pressed to cut rates at least in the near term as inflation will likely stay elevated. The projected long pause by BI means that the upside to capital formation and investment outlays could be capped despite some promising growth seen in bank lending.

Overall, the challenging external headwinds mean that Indonesia will be relying on domestic consumption and capital formation to drive growth momentum. And although we expect both household spending and investment activity to improve this year, the challenges posed by stubbornly high inflation and the inability on BI’s end to cut rates further point to an economic expansion that could very well fall short of last year’s growth mark.

Indonesia: Looking to consumption to carry the load

A more challenging global landscape means Indonesia will look to domestic consumption to bolster growth aspirations in 2023

think.ing.com

 

[Indos]

Indonesia: Looking to consumption to carry the load​

A more challenging global landscape means Indonesia will look to domestic consumption to bolster growth aspirations in 2023
In this article

• Economic growth
• Exports and the external balance: fading commodity boom
• Consumption here to save the day? Depends on inflation
• BI now in the mood to support growth, but does it have the space?
• Policy uncertainty as attention shifts to 2024 election
• Market outlook: IDR pressured, rates on hold and growth likely to slow from last year

View attachment 919545
Jakarta, Capital of Indonesia

Article

9 March 2023
By
Nicholas Mapa


Indonesia’s economy grew by 5.3% in 2022, which was the fastest pace of expansion in almost a decade. Economic growth was underpinned by robust household spending as well as a healthy dose of manufacturing and exports. Domestic consumption was brisk with Covid-19 restrictions fully eased and headline inflation staying relatively well-behaved in the first half of the year. Meanwhile, Indonesia’s export sector benefited from the commodity price rise in 2022 as demand for energy and oil increased due to the fallout from the Ukraine war. Surging exports in turn helped support domestic manufacturing, which boosted growth further.

Economic growth​

Indonesia is expected to churn out another solid growth performance in 2023, however challenges to the outlook have surfaced. The Bank of Indonesia (BI) expects growth to settle at the upper end of the forecast range of 4.5-5.3%, banking on private consumption, investments and exports to match last year’s growth. Given our expectation of a sustained moderation in commodity prices, we believe Indonesia will need to rely more heavily on household consumption and investment outlays to do the heavy-lifting as the boost from exports fades.

Exports and the external balance: fading commodity boom​

The glow from the 2022 commodity boom had faded by the fourth quarter of 2022 and this development will likely impact Indonesia’s external position while also having a negative impact on manufacturing activity. Global prices for coal and palm oil, two of the major exports in Indonesia, have fallen sharply from their 2022 highs which would translate to more modest export growth and trade surpluses. Indonesia’s record trade surplus coincided with sharp price increases for these commodities which also helped deliver the highest current account % of GDP ratio (1.05%) since 2010.

On top of its impact on the external balance, fading export flows may also impact economic growth by way of weaker mining and manufacturing activity. Mining and related industrial activity (oil and gas refinery) accounts for 9.1% of total GDP and softer demand for exports could also weigh on economic activities related to the mining and refining of these export products.

Mineral fuels and oils account for 37% of total exports​

View attachment 919546

Commodity boom not likely in 2023​

View attachment 919547

Consumption here to save the day? Depends on inflation​

With the boon from the export sector fading this year, Indonesia will be looking to domestic consumption to deliver the bulk of growth. The outlook for domestic consumption does have some upside after inflation appears to have peaked in late 2022. Headline inflation slowed to 5.5% year-on-year as of February (vs the 6% peak) while core inflation moved closer to target at 3.1%YoY.

Despite inflation coming down from its peak, however, price pressures remain evident with inflation still quite high for major items such as food (7.2%YoY), transport (13.6%) and utilities (3.4%). If headline inflation does eventually slow, this development could be supportive of household spending (53% of economic activity last year) and growth momentum overall.

One economic variable we will be watching carefully to approximate domestic consumption is retail sales. Retail sales, which had been relatively healthy in the first half of 2022, showed signs of slowing when faced with the sharp uptick in prices. If inflation does continue to slide this year, retail sales could potentially recover and provide some lift to overall growth. If inflation fails to slow, however, we could see only modest gains in retail sales with household spending only partially able to compensate for softer export receipts and weaker mining and manufacturing activity.

Inflation moderates somewhat, dips from peak of 6%​

View attachment 919548

Improvement in retail sales dependent on inflation trajectory​

View attachment 919549

BI now in the mood to support growth, but does it have the space?​

Faced with accelerating inflation in late 2022, BI had little choice but to join fellow regional central banks in hiking rates aggressively. The central bank rattled off a string of aggressive tightening in the second half of last year, lifting policy rates by a total of 225bps to steady the Indonesian rupiah (IDR) and combat inflationary pressures.

However, after seeing inflation moderate, BI Governor Perry Warjiyo declared victory over inflation and left policy rates untouched at the 16 February meeting. Warjiyo went so far as to indicate that he need not hike rates for the rest of the year suggesting that the current policy rate of 5.75% will be the peak for this tightening cycle. Dovish commentary from Warjiyo clearly shows that BI is now shifting its focus to bolstering growth to help offset the challenging global landscape.

Industry trends show that bank lending growth remained healthy despite the aggressive 225bps worth of tightening from BI and investment outlays could very well be a source of growth this year. Lending activity may have been supported by BI’s “macroprudential policies” such as the 0% downpayment for automotive loans, and looser loan-to-value ratios for property lending among others.

Furthermore, at least so far, growth in bank lending appears to have come without any detrimental impact on quality as the latest non-performing loan ratio slipped to 2.4%, the lowest since the start of the pandemic. Sustained economic expansion and the end of BI’s rate hike cycle bode well for bank lending, but with BI likely prevented from cutting policy rates further, the upside for capital formation may face some constraints.

​

Loan growth not at the expense of quality. Can it be sustained?​

Bank Indonesia

View attachment 919550

Policy uncertainty as attention shifts to 2024 election​

This could prove to be a pivotal year as this will be the last full year of President Jokowi with the presidential election fast approaching in February 2024. Indonesia’s elections will go ahead as planned despite a recent court ruling postponing the polls for two years.

Current polls show no clear-cut favourites with three names surfacing as potential successors to Jokowi. General Subianto (Gerindra party) who lost to Jokowi in 2014, Java Governor Ganjar (PDI-P) and forever Java Governor Anies (independent) are all still very much in the race. Very recently, Anies was nominated by three major parties with the incumbent PDI-P still yet to nominate their candidate. We believe attention will shift to the presidential elections with not much reform or legislation likely to take place between now and February 2024.

Market outlook: IDR pressured, rates on hold and growth likely to slow from last year​

Indonesia is set to post another year of decent growth in 2023 although challenges, especially on the external front, suggest that the pace of expansion could slow from last year. The economy will be missing the boost coming from the export sector as global demand fades, impacting both net exports and the mining sector's contribution to overall GDP growth.

Slower export receipts suggest a weaker external balance with the current account possibly slipping back into negative territory. A current account in deficit means that the IDR will face pressure throughout the year and the currency will likely lag any regional rally.

Meanwhile, fresh from declaring victory over inflation, we believe BI will be hard-pressed to cut rates at least in the near term as inflation will likely stay elevated. The projected long pause by BI means that the upside to capital formation and investment outlays could be capped despite some promising growth seen in bank lending.

Overall, the challenging external headwinds mean that Indonesia will be relying on domestic consumption and capital formation to drive growth momentum. And although we expect both household spending and investment activity to improve this year, the challenges posed by stubbornly high inflation and the inability on BI’s end to cut rates further point to an economic expansion that could very well fall short of last year’s growth mark.

View attachment 919551

Indonesia: Looking to consumption to carry the load

A more challenging global landscape means Indonesia will look to domestic consumption to bolster growth aspirations in 2023

think.ing.com

This foreign bank with Pinoy analist has tendency to predict less than the actual growth rate. Similar like IHS markit, this Pinoy also predicted Indonesian economy in 2022 at 4.8 % while in reality Indonesian economic growth in 2022 is 5.3 % alhamduliLLAH. There is minus 0.5% different over this Pinoy prediction.

 

[Indos]

AlhamduliLLAH

-----------------

Indonesia books over $8.5 bln budget surplus in Jan-Feb​

March 14, 2023 — 05:37 am EDT
Written by Gayatri Suroyo and Stefanno Sulaiman for Reuters ->

JAKARTA, March 14 (Reuters) - Indonesia had a 131.8 trillion rupiah ($8.57 billion) budget surplus in the first two months of this year as revenues soared, its finance minister said on Tuesday, much bigger than the $1.4 billion surplus recorded in the same period in 2022.

Revenues reached 419.6 trillion rupiah in January to February, up 38.7% from the previous year, while spending stood at 287.8 trillion rupiah, 1.8% bigger than the same period of 2022, Sri Mulyani Indrawati told a news conference.

($1 = 15,380. Rupiah)

(Reporting by Gayatri Suroyo and Stefanno Sulaiman; Editing by Martin Petty)

https://www.nasdaq.com/articles/indonesia-books-over-$8.5-bln-budget-surplus-in-jan-feb

 

[Indos]

Indonesia to frontload bond sales due to rising global rates -finance minister​

JAKARTA, March 14 (Reuters) - Indonesia will frontload its bond issuance this year, predicting that global interest rates would continue to rise and stay high in the second half of 2023, its finance minister Sri Mulyani Indrawati told a news conference on Tuesday.

The country raised 177.7 trillion rupiah ($11.55 billion) worth of bonds in the first two months of this year, even though it posted a budget surplus of 131.8 trillion rupiah in the same period, she said.

($1 = 15,380 Rupiah)
(Reporting by Gayatri Suroyo and Stefanno Sulaiman, Editing by Louise Heavens)

https://www.nasdaq.com/articles/indonesia-to-frontload-bond-sales-due-to-rising-global-rates-finmin

 

[Indos]

Indonesia to frontload bond sales due to rising global rates -finance minister​

JAKARTA, March 14 (Reuters) - Indonesia will frontload its bond issuance this year, predicting that global interest rates would continue to rise and stay high in the second half of 2023, its finance minister Sri Mulyani Indrawati told a news conference on Tuesday.

The country raised 177.7 trillion rupiah ($11.55 billion) worth of bonds in the first two months of this year, even though it posted a budget surplus of 131.8 trillion rupiah in the same period, she said.

($1 = 15,380 Rupiah)
(Reporting by Gayatri Suroyo and Stefanno Sulaiman, Editing by Louise Heavens)

https://www.nasdaq.com/articles/indonesia-to-frontload-bond-sales-due-to-rising-global-rates-finmin

Beside intended to fill expected budget deficit for 2023 fiscal year at around 2.4% of GDP, this bond also can be used as ammunition which is prepared to defend Rupiah in case The Fed keeps its interest rate increase. Although with 3 US banks that have colapse, the Fed will likely not as agressive as before in raising the interest rate or even there is possibility for The Fed tightening policy to stop soon.

From what I know, most of the bond or at least half of it is in USD denominated bond.

In short, USD bond is not only useful to improve gov spending, but also can be used for market operation in order to stabilize the currency. And current global situation with high interest rate situation make this strategy is needed.

Furthermore, with surplus on the budget in the first 2 months of the year, there are huge available USD that can be used for market intervention in currency market where the converted Rupiah will then be used to fill budget deficit.

Of course the effectiveness of this strategy can only happen when government spends much of its budget on domestic goods/services, it is because there will be large capacity to convert the USD into Rupiah if that is the case.

It means frontloading the bond issuance is not only necessary to get less interest (yield) that government must pay under current global situation, but it has other benefit as well and the benefit is getting bigger if we have surplus in the beginning of the year. There is possibility the surplus will keep happening until the end of third quarter due to the policy by Sri Mulyani to halt the spending for first semester this year as precaution mode, this policy is also made in previous fiscal year (2022).

 

[Indos]

G20 GDP Growth - Fourth quarter of 2022, OECD​

​

G20 GDP growth slows sharply to 0.3% in the fourth quarter of 2022​

​

Download the entire news release (PDF 120KB)​

15 Mar 2023 - Gross domestic product (GDP) in the G20 area grew by only 0.3% quarter-on-quarter in the fourth quarter of 2022 according to provisional estimates, compared with 1.4% in the previous quarter (Figure 1). This slowdown ended a volatile year for the G20 area, in which GDP growth moved from 0.7% in Q1 2022 to minus 0.2% in the second quarter, before rising and falling again in the third and fourth quarters.

The downturn in the G20 area in Q4 2022 and the previous volatility in 2022 mainly reflected trends in China, which accounted for almost one-quarter of the G20’s total GDP.[1] Growth in China fell from 3.9% in Q3 2022 to zero in Q4 as the easing of COVID-19 restrictions was accompanied by a rapid spread of infections which affected various sectors of the economy.

GDP growth also slowed or turned negative in most other G20 countries in Q4 2022. In South Africa, GDP contracted by 1.3%, following growth of 1.8% in the third quarter. GDP also contracted in Germany and Korea (minus 0.4% in both countries), Brazil (minus 0.2%) and Italy (minus 0.1%) (Table 1).On the other hand, GDP grew comparatively fast in Indonesia (2.2%) and Saudi Arabia (1.3%). In Türkiye GDP grew by 0.9% after a slight contraction in Q3 2022 (Figure 1). In the euro area, Canada, Japan and the United Kingdom, growth was flat in the fourth quarter.

Initial estimates of annual GDP growth (Figure 2) indicate that GDP continued to grow in the G20 area in 2022 (3.2%), but at only half of the pace of 2021 (6.3%) when economies were recovering from the initial impact of the COVID-19 pandemic. Among G20 countries, Saudi Arabia recorded the highest annual growth in 2022 (8.7%), followed by India (6.7%), Türkiye (5.6%) and Indonesia (5.3%). Japan recorded the lowest growth (1.0%).

G20 GDP Growth - Fourth quarter of 2022, OECD

OECD Information for journalists, G20 GDP growth slows sharply to 0.3% in the fourth quarter of 2022

www.oecd.org

 

[Indos]

Good data on the effect of 2008 economic crisis in USA to Indonesia economy

 

[Indos]

Hopefully we can achieve this with the help from Allah.

 

[Indos]

Southeast Asia (ASEAN) Rice Production 1960 - 2021​

 

[Indos]

Silmy Karim, previously CEO of several important manufacturing SOE like Pindad, Barata, and Krakatau Stell. Next administration should appoint him as SOE Minister. I am quite satisfied with Erick Thohir as SOE Minister, but he probably will not become SOE Minister anymore if the opposition under Anies Baswedan win the 2024 Election.

Another options for his future according to me is becoming Indonesian Aerospace CEO, Defend ID CEO, Garuda Indonesia Group CEO, or Indonesia Battery Corporation CEO.

Jokowi ask him to reform Indonesia Immigration Department under Ministry of Law and now he becomes head of that department after recently passing parliament approval.

 

[Indos]

Top Sri Mulyani! State Revenue Jumps, Taxes Are the Biggest​

NEWS - Aristya Rahadian, CNBC Indonesia
March 18, 2023 10:15 AM


Jakarta, CNBC Indonesia - The Ministry of Finance (Kemenkeu) reported that the performance of the country's State Budget (APBN) still shows positive performance. For the February 2023 period amid global economic turmoil due to inflation and high interest rates.

Top Sri Mulyani! Pendapatan Negara Melesat, Pajak Paling Gede

Kementerian Keuangan (Kemenkeu) melaporkan Kinerja Anggaran Pendapatan dan Belanja Negara (APBN) Tanah Air masih menunjukkan kinerja positif.

www.cnbcindonesia.com