Global Markets Group

Global Markets Group
Economic and Markets Research – Snapshot: GDP 2014 Report
Economic Research
February 2015
Economy Posted at Slowest Pace since 2010
Author: Juniman – Chief Economist
GDP Review
Indonesia economic growth in 2014 posted 5.02% (slowest pace since 2010), slowing from 5.58%2013 (base year
2010=100), driven by slowing growth of private consumption, government spending, investment and exports. Furthermore,
private consumption slowing of 5.38% in 2013 to 5.14% in 2014 is due to the impact of fuel price hike. The slowdown in
private consumption is also reflected in the slowdown in sales of cars and motorcycles. In 2014, car sales growth contracted
1.78% worse than 10.18% in 2013. Meanwhile, sales of motorcycles also grew only 1.59% in 2014 slower than 9.62% in
the previous year. Slow down of export growth to 1.02% in 2014 from 4.17% in 2013 is caused by slow recovery of the
global economy that has an impact on slowing global demand. The export slowdown is also the impact of government policy
which ban of the raw minerals exports and the declining commodity prices. Meanwhile, Slowing Indonesia's economic
growth in 2014 is also supported by the slowing growth of investment which grew 4.12%, down from 5.28% y-o-y in 2013.
Government spending was also slowing growth from 6.93%% in 2013 to 1.98% in 2014 as caused by poor absorption of
the government budget and the presence of government spending cuts. In the other hand, import was improving growth to
2.19% in 2014 from 1.86% in 2013 due to high oil import.
Based on the industry, Indonesia's economic was slowing in 2014 mainly due to the slowdown in Mining & quarrying sector,
Water supply, waste management, waste and recycling sector, Transportation and warehousing sector, Provision of
accommodation, eating, and drinking sector, Financial services and insurance sector, Real estate sector, and Education
services sector. Furthermore, mining & quarrying sector slowdown of 1.74% in 2013 to 0.55% y-o-y in 2014 due to the
impact of government policy which ban of the raw minerals export and the declining commodity prices. The Water supply,
waste management, waste and recycling sector grew 3.05% 2014, slowing from 4.06% y-o-y in 2013. Furthermore, the
Transportation and warehousing slowdown of 8.38% y-o-y in 2013 to 8.00% y-o-y in 2014 due to fuel price hike. Provision
of accommodation, eating, and drinking sector was slowdown of 6.80% 2013 to 5.91% in 2014. Financial services and
insurance sector slowdown of 9.09% in 2013 to 4.93% in 2014 at mainly come from a slowdown in the growth of the
banking sector due to the tight monetary policy by Bank Indonesia. Moreover, real estate sector slowdown of 6.54% in 2013
to 5.00% in 2014 due to the impact of tight monetary policy by Bank Indonesia and fuel price hike. Education services sector
slowdown of 8.20% in 2013 to 6.29% in 2014 due to the impact of fuel price hike.
GDP Outlook
Even though Indonesia's economic growth slowed to 5.02% y-o-y 2014, we expect growth in the Indonesian economy will
improve in 2015. This is caused by strong government consumption and investment. Furthermore, in accordance with robust
household consumption, expanding government consumption and investment in line with greater fiscal capacity to support
productive economic activities, including infrastructure development, will catalyze high economic growth. Moreover, the
increase in investment is mainly supported by the government makes it easy for investors to make investment licensing
services of the door under Investment Coordinating Board. Meanwhile, we expect exports will start to rise in 2015 due to the
improvement economies of Indonesia's major trading partners such as India, US, Singapore, and the UK. We expect
Indonesia's economic growth reached 5.50% y-o-y in 2015.
Market Implication
FX Markets
The slowing of Indonesia's economy in 2014 gives negative sentiment of Rupiah. Furthermore, the pressure of Rupiah still
occur as US Fed's plan to normalize monetary policy which impact on the strengthening of the USD against all global
currency including Rupiah. In addition, the pressures on Rupiah due to high demand for the USD in the domestic market for
corporate debt payments and oil imports. With this condition, the Rupiah is still under pressure in the near future.
Bond Markets
Indonesia's economic slowdown is also a concern of investors in the bond market in Indonesia. Furthermore, investors will
look at issues relating to the normalization of monetary policy by the Fed and the increasing tension between the Greece
Government with the ECB which can lead to turmoil in global financial markets. In addition, due to soaring investors bought
in Indonesia bond market in the last few weeks making yields fell fast and far below the benchmark rate (BI Rate). The
situation is prone to profit-taking. By looking at these conditions, we expect strengthening room in Indonesia bond market is
limited.
Changes in Consumer Price Index (Percent)
Main Driven of Inflation by Component
PT Bank Internasional Indonesia – Global Markets Group
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Share of GDP 1Q2014 by Expenditure (%)
Year on Year GDP Growth by Expenditure
Indonesia GDP Growth by Expenditure
Share of GDP by Expenditure (%)
20.000
(24.5)
Household Consumption
56.1
10.000
Non-Profit Institutions
Servings Households
Consumption
Government Consumption
23.7
0.000
2014
2013
2012
2011
2010
2009
-10.000
1.2
9.5
5.000
-5.000
Investment
34.0
15.000
Exports
-15.000
Imports
GDP
Household
Government
Investment
Exports
Imports
Non-Profit Institutions Servings Households
Source: BPS & BII Economic Research
Source: BPS & BII Economic Research
Indonesia’s Automotive Sales
Indonesia’s Consumer Activity Index
Indonesia's Automotive Sales
Car (LHS)
Thousands Units
140.0
Indonesia's Consumer Activity
Motorcyle (RHS)
Thousands Units
800.0
700.0
600.0
500.0
400.0
300.0
200.0
100.0
0.0
120.0
100.0
80.0
60.0
40.0
20.0
0.0
PT Bank Internasional Indonesia – Global Markets Group
Retail Sales Index
Consumer Confidence Index
180.000
160.000
140.000
120.000
100.000
80.000
Jan-15
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
Dec-12
Nov-12
Oct-12
Sep-12
Aug-12
Jul-12
Jun-12
May-12
Apr-12
Mar-12
Feb-12
Jan-12
Dec-11
Nov-11
Oct-11
Sep-11
Aug-11
Jul-11
Jun-11
May-11
Apr-11
Mar-11
Feb-11
Jan-11
Dec-10
Nov-10
Dec-14
Jul-14
Feb-14
Sep-13
Nov-12
Apr-13
Jan-12
Jun-12
Aug-11
Mar-11
May-10
Oct-10
Dec-09
Jul-09
Feb-09
Sep-08
Nov-07
Apr-08
Jan-07
Jun-07
Aug-06
Oct-05
Mar-06
Source: CEIC & BII Economic Research
200.000
Source: CEIC & BII Economic Research
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Macro Economic Indicators
Indicators
2011
2012
2013
2014F
2015F
2016F
Inflation (%YoY)
Core Inflation (%YoY)
Exchange Rate Eop (Rp/US$)
Exchange Rate Avg (Rp/US$)
Curent Account (% GDP)
Fiscal Balance (% GDP)
Interest Rate
BI Rate (% p.a)
Time Deposit 3 month (% p.a)
Lending rate working capital (% p.a)
3.79
4.34
9068
8773
0.20
-1.14
3.65
4.40
9670
9419
-2.78
-1.77
8.08
4.32
12189
10564
-3.33
-2.23
8.36
4.93
12440
11885
-2.95
-2.20
5.01
4.31
12500
12514
-2.50
-1.80
4.80
4.11
12200
12260
-1.80
-1.60
6.00
6.81
12.18
5.75
5.76
11.50
7.50
7.61
12.12
7.75
9.43
12.86
8.00
9.53
13.19
8.25
9.72
13.38
24.67
24.21
21.41
33.21
24.59
19.07
2.17
894
16.93
8013
8.67
117.9
6.56
110.1
6.17
24.05
19.87
23.21
27.39
23.08
15.81
1.87
1116
24.84
7064
-11.83
145.1
6.14
112.8
6.03
26.53
13.67
20.43
34.95
21.60
13.60
1.77
1230
10.18
7744
9.62
172.4
6.25
99.4
5.58
17.19
10.41
12.14
14.13
12.15
13.30
2.50
1208
-1.78
7867
1.59
160.8
6.12
111.9
5.02
12.55
9.73
18.12
20.45
16.41
14.24
3.00
1154
-4.46
7558
-3.93
156.5
6.50
116.6
5.50
15.47
12.70
20.45
22.95
19.11
14.44
2.50
1250
8.29
8104
7.23
n.a
5.74
119.9
6.02
Credit
Growth (% YoY)
Property Credit
Consumer credit
Working Capital Credit
Investment Credit
Total Credit
Deposit
NPL Commercial Banks (%)
Car Sales (1000 Units)
Car Sales Growth (%)
Motorcycle Sales (1000 Units)
Motorcycle Sales Growth (%)
Government Capex (Rp tn)
Unemployment Rate (%)
International Reserve (US$ bn)
GDP Growth (%)
Note : the red numbers are forecast
Source : BII Economic Research
BII ECONOMIC RESEARCH DIVISION
Sentral Senayan III, 8th Floor
Jl. Asia Afrika No. 8, Gelora Bung Karno - Senayan
Jakarta 10270, Indonesia
Ph: +62 (021) 29228888
Fax: +62 (021) 29228849
Juniman
Chief Economist
Juniman@bankbii.com
+62-21-229228888 (29682)
Anup Kumar
Fixed Income Analyst
AKumar@bankbii.com
+62-21-229228888 (29602)
Myrdal Gunarto
Industry Analyst
MGunarto@bankbii.com
+62-21-229228888 (29684)
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variables. It is also certified that the views and recommendations contained in this report are not and will not be influenced by any part or all of our
compensation.
PT Bank Internasional Indonesia – Global Markets Group
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