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NEW UPDATES Asean Affairs   9  November 2015  

RI economy predicted to continue cooling

Indonesia’s economy will continue to cool until next year in response to the probability of a US Federal Reserve rate hike, low commodity prices and the possibility of continued renminbi depreciation, economists with the ANZ Bank have said.

ANZ senior rates strategist for Asia Kumar Rachapudi projected Thursday that the country’s economy would expand only 4.6 percent this year and 5 percent next year, lower than the government’s target of between 4.7 and 5.1 percent this year and 5.5 percent in the following year.

“The last few quarters of growth have been slightly below five percent,” he told reporters in South Jakarta, adding that the recovery process would be slow.

Private consumption appeared restrained by lower incomes from weak commodity prices and lacklustre investment, his research note read.

Previously, the International Monetary Fund’s (IMF) World Economy Outlook (WEO) lowered Indonesia’s growth for 2016 to 5.1 percent, down from an initial 5.5 percent estimate in the April WEO.

The World Bank has also revised down its forecast on Indonesia’s gross domestic product (GDP) for 2016 to 5.3 percent from the initial 5.5 percent estimate it made in July. For this year, however, the WB maintained its 4.7 percent forecast.

The Central Statistics Agency (BPS) issued on Thursday Indonesia’s third quarter GDP growth. The Agency calculated that Indonesia’s growth hit 4.73 percent, a slight increase from the 4.67 percent recorded in the previous quarter.

Rachapudi said that external factors such as China’s transformation from a production-oriented to consumption-oriented country, weak commodity prices and uncertainty over the Fed rate would continue to affect Indonesia’s growth.

ANZ financial markets research global head Richard Yetsenga expected the Fed rate to increase in December. Such a move would start the beginning of the first tightening cycle since 2004. However, he said that any increases would be delivered gradually.

“Asia is quite sensitive to the Fed interest hike,” he said, adding that for the region, the economic environment would not feel very positive because world trade cycles were unusually weak at present. He predicted that global interest and commodity prices would keep low until next year.

Indonesia has suffered a fall in its export value due to falling commodity prices and the cooling economies of its trading partners.

Indonesia recorded a US$6.22 billion trade surplus as of August this year. However, the surplus was due to a fall in imports rather than higher exports. Total exports and imports slumped by 12.7 percent and 18.96 percent year-on-year (yoy), respectively.

ANZ markets strategist for China David Qu said that China would continue its renminbi devaluation to prop up the competitiveness of the country’s exports and reduce deflation risks. He projected that the world’s second largest economy would expand only 6.8 percent this year and 6.4 percent next year.

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More






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