• Indonesian economy likely to grow 5.2 pct in 2017, BI likely to cut rates in Q4

    Source: FxWire Pro - Commentary / 07 Aug 2017 19:21:20   America/New_York

    The Indonesian economic growth is expected to accelerate this year. According to an ANZ research report, the GDP is likely to expand 5.2 percent and improve just moderately to 5.3 percent next year. Meanwhile, the country’s inflation is expected to slow down to 3.2 percent next year from 4 percent this year with no administrative adjustments on the horizon.

    The policy rates, in the meantime, are expected to remain the same, but a period of balanced growth should be supportive of the IDR bond market, stated ANZ. The supply outlook has deteriorated as the issuance amount was hiked by IDR 33 trillion to fund the higher deficit. Supply risk is to the upside if spending realisation is higher than the DMO’s expectations. The financing position was at 69 percent of gross supply, or 74 percent of net supply. Flush onshore liquidity conditions are expected to remain a main support for frontend issuance while foreign demand is the swing factor in the demand outlook.

    “We now expect Bank Indonesia to cut the 7-day reverse repo by 25bps to 4.50% in Q4 2017”, added ANZ.

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