Indonesia Business Forecast Report Q3 2009

Publication Date	July 2009
Publisher	Business Monitor
Product Type	Report
Pages	61
ISBN Number	1745-0586
Product Code	BMI02146

Buy this product or for assistance call +44 20 7060 7474

PDF £250.00$416 | €280

FAX Order above formats by FAX

Summary

Indonesia's economy demonstrated surprising resilience in the face of the global slowdown in Q109, with real GDP growing by 4.4% y-o-y, outperforming many of its regional peers which were more dependent on global trade. We remain reasonably optimistic about Indonesia's growth prospects and are maintaining our forecast of 3.6% real GDP growth in 2009. Continued monetary easing and active fiscal stimulus should provide a cushion against sharper slowdowns over the rest of the year, but we highlight that maintaining the robustness of private consumption through job creation will remain critical in the coming quarters.

The parliamentary elections concluded in April ended with President Susilo Bambang Yudhoyono's Democratic Party gaining a large proportion of votes in the poll. This has dampened political uncertainty in Indonesia and should prove to be positive for firms as Yudhoyono persists with his pro-business policies. The upcoming presidential elections in July will be another chance for Yudhoyono to secure his position. With opinion polls putting Yudhoyono firmly in the lead, we currently expect him to retain the presidency without too many problems.

Indonesia's unemployment rate fell from 8.39% in August 2008 to 8.14% in February this year, signalling that job creation has been more than sufficient to curtail job losses stemming from the current downturn. This should provide much-needed support for private consumption. However, given that investment is expected to fall this year as firms reassess the impact of the global slowdown, it is likely that job creation will slow in the coming quarters. This, coupled with slowing investment, poses a significant downside risk to headline growth.

Indonesia's business environment is still plagued by poor infrastructure and weak institutions. This is reflected in scores of 32.7 (out of 100) and 22.5, respectively, in the infrastructure and institutions subcomponents of BMI's business environment ratings. Although efforts have been stepped up to combat graft in recent years, the arrest of Indonesia's anti-corruption chief may prove to be a setback. Nonetheless, we do not expect the case to have any lasting impact on the Corruption Eradication Commission (KPK).

Content

Executive Summary
Economy Proving Resilient
Chapter 1: Political Outlook
- SWOT Analysis
- Bmi Political Risk Ratings
- Domestic Politics
- Running Mate of Convenience
- President Susilo Bambang Yudhoyono's Democratic Party Secured 20.85% (Nearly Triple That of The Preceding Elections) of The Votes at The Parliamentary Elections That Concluded in April, A Decisive Victory over Key Rivals
- Golkar Party (14.45%) and The Indonesian Democratic Party for Struggle (Pdi-P, 14.03%).
Chapter 2: Economic Outlook
- SWOT Analysis
- Bmi Economic Risk Ratings
- Economic Activity
- Private Consumption to Keep Economy Resilient
- Indonesia's Private Consumption Has Proved Remarkably Resilient and Played A Large Part in The Country's 4.4%
- Gdp Growth in Q109.
- Fiscal Policy
- Budget Deficit Not A Concern, but Actual Disbursement Is
- A Return of Investor Risk Appetite Should See Demand for Indonesia's Sovereign Debt Remain Well Supported, and Consequently Provide The Government with Improved Financing Terms for The Planned Sale of Retail Bonds in August.
- Monetary Policy
- Further Easing Remains on The Cards
- Bank Indonesia (Bi) Extended Its Current Monetary Easing Cycle in June by Lowering The Benchmark Bi Rate by 25bps to 7.00% in Order to Support Sagging Economic Activity.
- Exchange Rate Policy
- Investor Sentiment to Determine Rupiah's Path
- The Indonesian Rupiah Has Appreciated Significantly since The Beginning of 2009 and We Expect The Unit's Strength to Persist as Investors Risk Appetite Continues to Improve.
Chapter 3: 10-Year Forecast
- The Indonesian Economy to 2018
- Great Potential, but Average Performance Anticipated
- Indonesia Has Considerable Potential, but Further Institutional Reform and Large-Scale Infrastructure Investment Is Essential to Realising This over The Medium-to-Long Term.
Chapter 4: Special Report
- The Outlook for Global Banking
- Business Environment Rating Outlook
Chapter 5: Business Environment
- SWOT Analysis
- Bmi Business Environment Risk Ratings
- Business Environment Outlook
- Institutions
- Infrastructure
- Market Orientation
- Bmi Trade Ratings
- Operational Risk
Chapter 6: Key Sectors
- Information Technology
- Executive Summary
- The Indonesian IT Market Should Grow at A Cagr of around 9% between 2008 and 2013, despite Signs in 2008 of An IT Spending Slowdown as Demand in Segments Was Affected by The Global Economic Crisis.
- Food and Drink
- Executive Summary
- Having Revised Its Format Breakdown Definition, Bmi Predicts That The Large-Scale Hypermarket Format Will Remain The Strongest Retail Model over The Forecast Period.
Chapter 7: BMI Global Assumptions
- Global Assumptions
List of Tables
- Table: Indonesia Political Overview
- Table: Economic Activity
- Table: Fiscal Policy
- Table: Monetary Policy
- Table: Indonesia Long-Term Macroeconomic Forecasts
- Table: Loan-to-Deposit Ratios, Selected States
- Table: Loan Growth (% Chg Y-O-Y), Selected States
- Table: Commercial Banking Business Environment Ratings, Selected States
- Table: Bmi Business and Operational Risk Ratings
- Table: Bmi Legal Framework Ratings
- Table: Labour Force Quality
- Table : Asia , Fdi Annual Inflows
- Table: Top Export Destinations
- Table: Indonesia's IT Industry - Historical Data and Forecasts
- Table: Structur E of Indonesia's Mass Grocery Retail Sector - Est. Number of Outlets
- Table: Glo Bal Assumptions
- Table: Glo Bal & Regional Real Gdp Growth
- Table: Commodities