Economic
Highlights:
Money Supply and Loan Growth Continue to Decelerate in September
Money Supply and Loan Growth Continue to Decelerate in September
¨ Indonesia’s money supply(M2)
growth edged down to 5.1% y-o-y in September, from +7.8% in August and
+8.7% in July. This was due to a slowdown in net domestic and foreign
operation.
¨ Loans growth slackened, on
account of slower growth in loans extended for working capital, investment and
household sector. Deposit growth, likewise, moderated in September, due to
slower increases in savings and time deposits and a reversal into a contraction
in demand deposits. Going forward, we expect demand for private credit to
pickup, aided by monetary policy easing and a rebound in economic growth
that could induce more household spending and borrowing.
¨ Bank Indonesia (BI) board of
governors’ meeting decided to cut the BI 7-Day (Reverse) Repo rate to 4.75% on
20thOctober2016. Similarly, deposit facility and lending rates were
cut to 4.00% and 5.5% respectively. For the rest of the year, we expect the BI
to retain its policy rate unchanged. Further out, we expect the BI to slash
its key policy rate by another 25 basis points in 2017 to support economic
growth.
¨ Meanwhile, Indonesian rupiah (IDR) continued to appreciate, partly due to unchanged Fed funds rate in September and the successful implementation of the amnesty tax. The IDR, however, 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 towardIDR13,100 in 2016 before weakening to 13,400 by end-2017
¨ Meanwhile, Indonesian rupiah (IDR) continued to appreciate, partly due to unchanged Fed funds rate in September and the successful implementation of the amnesty tax. The IDR, however, 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 towardIDR13,100 in 2016 before weakening to 13,400 by end-2017
Kindly click the following link for the full report: Money Supply and Loan Growth Continue to Decelerate in September
Best regards,
Rizki Fajar
Vice President
Economist
PT. RHB Securities
Indonesia
