Economic Highlight:
Money Supply and Loan Growth Continue To Pick Up
Money Supply and Loan Growth Continue To Pick Up
¨ Indonesia’s
money supply (M2) growth edged up to 8.7% y-o-y in June,
from +7.6% in May and +7.2% in April. The increase was due to a rebound in net
foreign operation from the issuance of government external debt during the
month. These were partly offset by a decline in net domestic operation.
¨ At the
same time, total loans growth increased, on account of faster growth in loans
extended for working capital and investment. Deposit growth, on the other hand,
eased in June, due to slower increases in demand and time deposit. Going forward,
we expect demand for private credit to continue picking-up, aided by
easing monetary policy and a rebound in economic growth that could induce more
household spending and borrowing.
¨ Bank Indonesia (BI)
board of governors’ meeting decided to maintain the BI rate at 6.50% on 21st
July 2016. Nonetheless, we expect BI to cut
the new benchmark 7-Day (Reverse) Repo rate by another 25bps, if the economic
growth in 2Q remains soft
¨ Meanwhile,
Indonesia rupiah (IDR) appreciated of late, mostly due to an inflow of capital
after the peak of seasonal income and dividend repatriation period last month.
It is also helped by the approval of tax amnesty bill. However, the IDR is
still susceptible to global financial markets even though the selling pressure will
unlikely be as severe as last year. As a whole, we expect the IDR to trade
toward IDR13,200 in 2016.
Best regards,
Rizki Fajar
Vice President
Economist
PT. RHB Securities
Indonesia
