Economic
Highlights:
Money Supply and Loan Growth Decelerate in July
Money Supply and Loan Growth Decelerate in July
¨ Indonesia’s money supply (M2) growth edged
down to 8.1% y-o-y in July, from +8.7% in June and +7.6% in May. The
decrease was due to a slowdown in net domesticoperation,on account
ofslowerloangrowth. This waspartlymitigated bya pick-up in net
foreignoperation.
¨ At the same time, total loans growth
decreased, on account of slower growth in loans extended for working capital
and investment. Deposit growth, on the other hand,accelerated in July, due to
faster increases in demand and time deposit.Going forward, we expect demand
for private credit to pickup, 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 7-Day (Reverse) Repo rate at5.25% on 19st
August 2016 but the lending rate was cut by 100 bps to 6.0% in order to
keep a more symmetetrical and narrow interest rate corridor under the new
benchmark rate.Nonetheless, we expect BI to cut the new benchmark 7-Day
(Reverse) Repo rate by another 25bps for the rest of the year.
¨ Meanwhile, Indonesia rupiah (IDR) depreciated
of late, mostly due to rising expectation on Fed rate hike in September.Further
out, 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 towardIDR13,400 in 2016.
Kindly click the following link for the full report: Money Supply and Loan Growth Decelerate in July
Best regards,
Rizki Fajar
Vice President
Economist
PT. RHB Securities
Indonesia
