Indonesia: A second term for Jokowi – ABN AMRO

Sandeep Kanihama FXStreet Contributor

Arjen van Dijkhuizen, senior economist at ABN AMRO, points out that for the first time in history, Indonesia held presidential and parliamentary elections simultaneously on Wednesday 17 April and while official results will only be announced in May, unofficial results point to a clear victory for Jokowi.

Key Quotes

“On the basis of these official results, Jokowi claimed victory today, pointing at a 54.5% lead according to results of 12 polling agencies.”

“Assuming that Jokowi has indeed gained a second term, he has to start finding support in parliament and form a government (the 2nd term of his government would not start before October).”

“General expectation is that Jokowi will succeed in finding the necessary support and forming a government that will remain business friendly and aiming at further improvements of the investment climate and the infrastructure to support economic growth. Jokowi had already rolled out a USD 350bn infrastructure scheme in his first term, while he also intends to invest more in education.”

“With a more dovish Fed, financial markets have become more forthcoming to Indonesia. Moreover, we expect the significant cooling in global industry and trade seen in end 2018 to fade in the course of this year and Indonesia should profit from that. A more constructive response to the US-China trade conflict (with a ‘deal’ now expected in early May) is also helpful in this respect.”

“As the main policy rate has been held on hold (6%) since October 2018, the real policy rate (measured as the difference between the policy rate and actual inflation), has risen to 3.5% yoy in March. Against that background and with the Fed more dovish and the current account deficit back under control, we do see some room for Bank Indonesia to cut the policy rate one or two times this year.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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