Indonesia: Economy losing some momentum – ANZ

Sandeep Kanihama FXStreet Contributor

According to ANZ analysts, Indonesia’s economy has lost some momentum as Q2 2019 growth came in at 5.05% y/y, the softest in two years, while weak commodity prices are posing a challenge.

Key Quotes

“More policy support is on the way…

The government’s FY2020 budget has penciled in record spending of IDR2,529trn (14.5% of GDP)
Bank Indonesia lowered its reserve requirement ratio in June and kicked off its rate-cutting cycle in July

…but current account trends limit the fiscal and monetary policy space

The national savings rate is falling, while investment efficiency is waning
Large interest payments on the stock of FDI and portfolio liabilities are a structural challenge
Rising dependence on foreign flows”

“Higher FDI inflows are key to breaking growth constraint.”

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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