INDONESIA
Source: MNI - Market News/Refinitiv
- Bank Indonesia has cut rates twice now to “drive economic growth” and it continues to use macroprudential policies to support the economy, which is likely to be maintained given rupiah weakness in the face of global uncertainty (USDIDR +0.5% today to 16425.5). In February it said that growth is “solid” but “must still be encouraged”, which suggests that it would like to reduce rates further if the currency will allow.
- The decline in consumer confidence last month was driven by the expectations component which fell 1.5% m/m driven by broad-based weakness, while economic conditions rose 0.6% m/m driven by the durable goods purchase measure. Current and expected employment indices were lower.
- Consumer confidence is a good indicator for real quarterly consumption. Monthly data has not been as robust though with retail sales volumes lacklustre up 1.8% y/y in December. Auto sales growth is off its early 2024 lows but continues to contract falling 11.3% y/y in January. Credit growth to individuals is also off its high growing 3.2% y/y in January down from 9.8% y/y in January 2024.
- Tourist arrivals remain robust rising 13.9% y/y in December but this was down from December 2023’s 32.5% y/y.
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