Economic Update:
Money Supply & Loan Growth Continued to Accelerate
Money Supply & Loan Growth Continued to Accelerate
Indonesia’s
money supply (M2) growth edged up to 9.3% YoY in Nov 2016, from +7.5% in Oct
2016 and +5.1% in Sep 2016. This was due to a pick-up in net domestic
operations but partly offset by a moderation in net foreign operations. In
addition, the supply of narrow money (M1) surged. Going forward, we expect
broad money to grow faster at 11% in 2017, underpinned by stronger projected
economic growth.
♦
Private credit expanded. Total loans growth increased in
Nov 2016, on account of faster growth in loans extended for working capital and
investment, while consumer credit stabilised. Going forward, we expect
demand for private credit to pick up, aided by monetary policy easing and
stronger projected economic growth.
♦
Deposit growth, likewise, surged. All
types of deposits recorded stronger performances during Nov 2016.
♦ Key
policy rate likely to be cut by 25bps. We expect Bank Indonesia (BI) to
cut its key policy rate by another 25bps in 2017 (to 4.5%) to
support economic growth under stable IDR circumstances.
♦
IDR continued to depreciate against the USD. IDR
strengthened slightly by 0.1% against the USD in Dec 2016, after a sharper
weakening the month before due to capital outflows after Trump’s unexpected win
in the US Presidential elections. We expect the IDR to stay weak and
trade toward 13,700 by end-2017.
Kindly click the following link for the full report: Money Supply & Loan Growth Continued to Accelerate
Best regards,
Rizki Fajar
Vice President
Economist
PT. RHB Securities
Indonesia
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