Good morning,
Indonesia: Growth
Momentum Catching Up, Economic Growth To Be Stronger In 2H 2016
¨ Indonesia
economy will likely expand by 5.2% y-o-y in 2H16, faster than +5.0% estimated
for 1H, on account of a recovery in consumer
spending and an improvement in investment, aided by monetary policy easing
and the government’s economic stimulus packages to promote business spending.
For the full-year, we are maintaining our forecast for real GDP to
grow at 5.1% in 2016, higher compared to +4.8% in 2015, but we see downside
risk to our forecast.
¨ On
the external front, we expect exports to recover in 2H16, on account of the relaxation of export ban and a modest improvement in
developed countries’ demand. The imports are also expected to grow in tandem
with rising domestic demand that could pressure on net exports during
the year.
¨ The
government recorded a higher fiscal deficit of 4.9% of GDP in 1Q 2016
compared with 3.1% in the corresponding period of
last year, as the increase in expenditure outpaced revenue collection. Hence,
the government will likely cut spending to maintain a deficit of below 3% of
GDP. In our view, the fiscal deficit is projected to widen to 2.7% of GDP,
from last year’s -2.5% of GDP.
¨ The
current account deficit in the balance of payments will likely remain
manageable in 2H, albeit deteriorates slightly as a result of a higher
imports demand. The deficit will likely increase to
USD20.9bn or 2.3% of GDP in 2016, from a deficit of USD17.8bn or 2.1% of GDP
in 2015.
¨ On
consumer price outlook, we expect inflation to ease
to an average rate of 5.0% in 2016, down from +6.4% in 2015, on account of
low oil prices and manageable volatile food prices. Nevertheless, as the
inflation will likely bounce back during the Ramadhan festive season and the
BI will soon replace its policy rate with the 7-Day (Reverse) Repo rate in
August, which currently stands at 5.25%, we foresee the BI to maintain the BI
rate at 6.50% in July.Further out, we expect another 25 bps cut to 7-Day
(Reverse) Repo rate, if the economic growth in 2Q remains soft and given that
BI mentioned earlier there is still a need for additional easing to stimulate
growth. (Rizki Fajar)
Link to Daily
report: Indonesia Morning Cuppa - 220616
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Media Highlights:
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Corporates
Ciputra to develop
low cost apartment in East Jakarta
Ciputra Development
(CTRA IJ, BUY, TP: IDR1,540) is in the midst of a joint venture process with
Multivision Group and Gamaland Group to develop 13.5ha of land in Pulo
Gadung, East Jakarta. The company stated that around 20% of the apartment
units are catered to the low income community. Ciputra estimated that it can
develop 16,000 apartment units on the land with a price point that ranges
between IDR10-15m per sqm. The low cost apartment project is estimated to
cost IDR4trn. (Kontan)
Comments: We believe the
allocation of about 20% of the apartment units catering the low income
community is to anticipate the government regulation on balanced residential
(hunian berimbang). Note that Jokowi has signed PP No.14/2016 in 14 Jun,
where in art 21 verse (1, 2, 3) regulated that developers must build balanced
residential housing in one piece of land. (Lydia Suwandi)
BCA allocates
IDR2trn for banks acquisition
Government to
accelerate Bocimi toll road construction
Wijaya Karya new
contract reached IDR10.25trn
Jasa Marga and
Krakatau Steel seeking for additional loan
Duta Intidaya sets
the IPO share price
Plaza Indonesia to
conduct share buyback
High Speed Train
construction permit set to release next week
Best regards,
Helmy Kristanto
Director
Head of Indonesia Research
PT. RHB Securities Indonesia
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