• Our Indonesian clients are more optimistic about business prospects this year than in 2014
• Clients are more concerned about the domestic economy than other economies
• Most clients expect Bank Indonesia to either maintain or hike the BI rate i...
Fuel-subsidy reforms and the oil-price decline provide fiscal space for the government
• BI is unlikely to cut the BI rate soon; we expect it to hike to 8.25% in H2-2015
• We forecast year-end inflation of 4.5% y/y, but acknowledge downside risk i...
Indonesia, Malaysia and Thailand take advantage of falling oil prices to reform their energy subsidies
• While reforms are positive for the economies, falling oil prices are a short-term negative for Malaysia
• Subsidy reform will strengthen the...
• Hiking fuel prices and dealing with a fragmented parliament are among Jokowi’s first challenges
• We revise our inflation, BI rate, and GDP growth forecasts to reflect expected fuel-price hikes in Q4-2014
• Rates market is largely pricing in a f...
• We estimate the macro impact of a sustained change in oil prices
• The impact will likely be affected by whether supply or demand dynamics drive the move more
• Lower oil costs will likely result in reverse stagflation
• Our central case is for...
• Indonesia’s economic fundamentals are not as weak as they seem
• We still project the BI rate at 8.00% by end-2014, but adjust the timing of the next rate hikes to Q2 and Q3
• A further rally in IDR bonds will be tactical and limited; we maintai...
• Our Indonesian clients are slightly more optimistic this year on business prospects
• Our survey results suggest that sustaining revenue growth remains the key challenge
• Indonesian clients are bearish on their local currency vs. USD in 2014,...
• We expect Indonesia’s economic fundamentals to improve in 2014
• We lower our end-2014 BI rate forecast to 8.00% from 8.25%
• Trade balance is set to improve, driven more by import slowdown than by exports recovery
Parliament passed a non-expansionary budget for 2014, with a deficit target of 1.7% of nominal GDP
• We maintain our forecast of a deficit of 1.5% of nominal GDP
• Net supply target is IDR 205tn, or 12% lower than in 2013; stay Overweight duration...
• BI to focus more on stability, less on growth, even in election year 2014
• BI is likely to continue to tighten monetary policy, despite slowing inflation
• We estimate the new optimum real GDP growth rate at 5.5-6.0% in 2013 and 2014...
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