Prepared for Mandiri Investment Forum (MIF) 2018 February, , Jakarta

Transcription

1 Monetary Focus: Navigating the Domestic Economy Amid Risks Agus D.W. Martowardojo Governor Bank Indonesia Prepared for Mandiri Investment Forum (MIF) 2018 February, , Jakarta

2 BAL ECONOMIC RECOVERY CONTINUE: BECOMING MORE BROAD-BASED AS 2017: : 2.2 EU 2017: : 1.9 Japan 2017: : 0.7 China 2017: : 6.5 World 2017: : 3.6 India 2017: : 7.2

3 HER WORLD TRADE VOLUME AND COMMODITY PRICES Description GDP (%) US China Japan Euro India World Trade Volume (%) Brent Oil Prices (USD/Barrel) Commodity Prices (%)

4 PRICES IS ALSO ON AN UPWARD TREND BRENT Price Yearly Average Source: Bloomberg, as of Jan,

5 DUAL MONETARY TIGHTENING IN ADVANCED COUNTRIES Rate Hike Curren QE/Balance t Rate sheet Change Euro Area bps bps bps 0,00% QI QII QIII QIV Tapering Begins Firs depo rate hike 2019 USA 1,50% Mar 18 Jun 18 Dec18 UK 0,50% May 19 Japan -0,10% Canada 1,00% Apr 18 Oct 18 Australi a 1,50% Feb 18 Aug 18 New Zealand 1,75% Feb 18 May 18 Aug 18 Sweden -0,50% Apr 18 Oct 18 Norway 0,50% Dec18 ING, Goldman Sachs, HSBC, ANZ, processed

6 FUND RATE STARTED TO INCREASE SINCE YEAR-END OF 2015 BI-RATE BI-7 Days Repo Rate FED Fund Rate (RHS) %[VALUE] May % Nov May 2013 Jan [VALUE] 1 0 Dec

7 ONESIA S ECONOMY REMAINS ON STRONG FOOTING %, YoY PERTUMBUHAN EKONOMI NASIONAL Economicc Growth % 5.07 % Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Source: BPS

8 TER GROWTH IN RESOURCES-RICH REGIONS ACEH 3,58 SUMUT 5,56 Sumatera (22%) [VAL UE] 2016 I'17 II'17 III'17 IV'17 RIAU 2,58 SUMBAR 5,37 BENGKULU 4,60 JAMBI 5,20 SUMSEL 5, KEP. RIAU 2,57 KALBAR 5,80 LAMPUNG 5,31 KEP. BABEL 2,94 DKI 5,88 Kalimantan (7,9%) [VAL UE] 2016 I'17 II'17 III'17 IV'17 KALTENG 5,34 KALTARA 7,04 KALSEL 4,46 KALTIM 1,61 SULBAR 6,,63 SULSEL 7,78 Sulawesi (6%) [VAL UE] 2016 I'17 II'17 III'17 IV'17 SULTENG 9,15 GORONTALO 7,82 SULTRA 6,12 SULUT 6,53 MALUT 8,30 PAPBAR 6,32 MALUKU 5,11 NATIONAL [VALU E] 2016 I'17 II'17 III'17 IV'17 PAPUA 4,78 DRB 7,0%,0% PDRB < 7,0%,0% PDRB < 6,0%,0% PDRB < 5,0% % PDRB < 4,0% DRB < 0% BANTEN 5,75 JABAR 5,32 Jawa (58,5%) [VAL UE] JATENG 5,40 JATIM 5,72 DIY 5,25 BALI 4,01 NTB 0,58 Bali Nusra (3,1%) [VAL UE] NTT 5,29 Mapua (2,5%) [VAL UE] : BPS (processed) 2016 I'17 II'17 III'17 IV' I'17 II'17 III'17 IV' I'17 II'17 III'17 IV'17

9 ANCE OF PAYMENTS IS EXPECTED TO RECORD A LARGE SURPLUS INDONESIA S BALANCE OF PAYMENT USD Billion Current Account Capital and Financial Accunt Overall Balance I II III IV I II III IV I II III IV I* II* III** * Preliminary Figures** Very Preliminary Figures Source: Bank Indonesia

10 RING EXPORTS, MAINLY FOR NON OIL AND GAS COMMODITIES Billion USD TRADE BALANCE 3 Non Oil and Gas Oil and Gas Total

11 IAH HAS BEEN RELATIVELY STABLE RUPIAH MOVEMENT COMPARISON WiTH OTHER CURRENCIES upiah / USD upiah [VALUE] (Feb, 5 18) TRY ZAR BRL -3.27% -0.61% YTD 2018 vs 2017 Average Point to point 0.00% 1.96% 1.52% 8.75% USD/IDR Monthly Average Quarterly Average [VALUE] (Jan, 25 18) INR KRW PHP THB MYR IDR -2.54% -3.23% -0.47% -0.59% -0.04% 0.33% 2.21% 2.94% 3.75% 5.42% 6.15% 8.23% -5.0% -3.0% -1.0% 1.0% 3.0% 5.0% 7.0% 9.0% 11.0% ource: Reuters s offeb, Source: Reuters, Bloomberg As of Feb, 52018

12 RNATIONAL RESERVES AT RECORD HIGHH Billion USD International Reserve Months of Imports and Servicing Government External Debt (RHS) Month Source: Bank Indonesia

13 ROVING RISK PERCEPTION bps 300 [VALUE] (Sept 2015) CDS Risk Premium 5 years [VALUE] (Jan, ) [VALUE] (Jan, Jan-15 Feb-15 Mar- Apr-15 May- Jun-15 Jul-15 Aug- Sep-15 Oct-15 Nov- Dec-15 Jan-16 Feb-16 Mar- Apr-16 May- Jun-16 Jul-16 Aug- Sep-16 Oct-16 Nov- Dec-16 Jan-17 Feb-17 Mar- Apr-17 May- Jun-17 Jul-17 Aug- Sep-17 Oct-17 Nov- Dec-17 Jan-18

14 COMPOSITE POSTED ANOTHER RECORD HIGH IDX Composite Yearly Average 7000 (Jan, ) (Sept. 2015)

15 ATION STAYS WITHIN TARGET FOR 3 CONSECUTIVE YEARS %,yoy 20 CPI Core Volatile Food Administered Price

16 BANKING SYSTEM S RESILIENCE REMAINS INTACT Trillion Rp NPL Gross 2,9% NPL Net 1,3% Capital (RHS) Source: Bank Indonesia Risk Weighted Assets (RHS)

17 DIT GROWTH : LOWER THAN EXPECTED Bank s Credit Growth %, YoY 16% Total Working Capital Credit Investment Credit Cons Credit 14% 12% 10% 8% 7.86% 6% 4% 2% 0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Source: Bank Indonesia 10.26% 7.47% 7.47% 4.50% May Jun Jul Aug Sep Oct Nov Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

18 BANK FINANCING SOARED ONBANK FINANCING 700 Trillion Rp 600 Non Bank Financing Bank Financing (Loan) Source: KSEI

19 E RISKS CALL FOR CONTINUED VIGILANCE External Risk Monetary policy normalisation in advanced countries, geopolitical tension, and rising oil prices Domestic Risk Prolonged corporate consolidation, sluggish credit growth, and rising inflation BANK

20 OLICY MIX : MAINTAIN MACROECONOMIC AND FINANCIAL STABILITY MONETARY POLICY Maintain inflation within the target range and manage the current account deficit at a healthy level EXCHANGE RATE POLICY Maintainexchange rate stability in line with it s fundamental value, while also maintaining market mechanisms MACROPRUDENTIAL POLICY Strengthen financial system resilience against systemic risk through implementation of Macroprudential Intermediation Ratio (MIR) and Macroprudential Liquidity Buffer

21 TER ECONOMIC PERFORMANCE GOING FORWARD GDP INFLATION 2017* 2018* * ± 5.1 Rp CAD % ,5±1% CREDIT * < 2% % * ± 8% 10 12% Sumber: BPS, OJK, & Bank Indonesia; * Proyeksi Bank

22 ONESIA : INVESTMENT DESTINATION OF CHOICE Economist: Indonesia rounds out the top five of Asian economies that can look forward to increased investment ding. (January 2018)* China India Indonesia Vietnam Singapore Australia Hong Kong Thailand South Korea Japan Philippines Malaysia Myanmar Taiwan Source: The Economist Asia Business Outlook Survey 2018

23 ONESIA : INVESTMENT DESTINATION OF CHOICE AD: Indonesia is listed as the top 5 prospective investment destination in the world (June 2017)** United States (1) 40 China (2) 36 India (3) 20 Indonesia (8) 11 Thailand (14) 11 Brazil (7) 9 United Kingdom (4) 7 Germany (5) 7 Mexico (7) 7 Philippines (9) 6 Spain (25) 5 Vietnam (14) 4 Singapura (18) Canada (18) Australia (13) % of executives responding (x) = 2016 ranking Source: United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2017

24 ONESIA : INVESTMENT DESTINATION OF CHOICE Among ASEAN countries, Indonesia is one of the most preferred place for business investment (November 2017) China India Vietnam Thailand Indonesia USA Mexico Philippines Myanmar Brazil Korea Malaysia Russia Singapore Turkey Source: JBIC Outlook for Japanese Foreign Direct Investment (29th Annual Survey)

25 2017 AT KEARNEY FDI CONFIDENCE INDEX MOST IMPORTANT FACTORS FOR INCREASING FDI Avaiability of Quality Targets 34% Macroeconomic Environment Availability of Funds Risk Tolerance Foreign Exchange Dynamics 29% 27% 27% 25% Regulatory Environment Prices of Targets 20% 22% Reserve Requirements 13% 0% 10% 20% 30% 40%

26 THANK YOU