The recent outperformance of Indonesian stocks has masked a budding macro issue in the country: a deteriorating balance of payments. Capital inflows into the country are dwindling at a time when the current account balance is…
Executive Summary Indonesia’s Balance Of Payments Will Be Under Pressure Indonesian domestic demand is struggling in the face of tight policy settings. High real borrowing costs are constraining credit growth, and…
Indonesia’s domestic demand is struggling to recover in the face of a very tight policy setting. Domestic consumption and consumer confidence are languishing well below pre-pandemic levels. Real borrowing costs for the…
Highlights Indonesian domestic demand is struggling to recover in the face of a very tight policy settings. Exceptionally high real borrowing costs continue to hurt non-financial sectors. This will hurt banks too as credit is stymied…
Highlights The surge in energy prices going into the Northern Hemisphere winter – particularly coal and natgas prices in China and Europe – will push inflation and inflation expectations higher into the end of 1Q22 (Chart of…
Highlights The rapid spread of the COVID-19 delta variant in Asia will re-focus precious metals markets anew on the possibility of another round of lockdowns and the implications for demand, particularly in Greater China and India,…
In a recent report on Indonesia, our Emerging Markets Strategy team pointed out a structural shift in the Indonesian USD bond market. Indonesian sovereign USD bonds are now considered among the safest within the EM universe.…
Highlights Indonesian domestic demand is struggling amid tight policy setting. Exports will weaken too, as the Chinese money and credit impulses have rolled over. Slowing Chinese impulses are negative for the rupiah as well. An…
At its Thursday meeting, Indonesia’s central bank cut its policy benchmark by 25 basis points and relaxed lending rules as it downgraded the economic outlook and trimmed its forecast for bank lending growth. The seven-day…
Highlights Years of extremely high real borrowing costs have decimated Indonesian firms’ return on capital. But tight money constraints have also forced them to improve their operating efficiency meaningfully. A cut in real…