Market Pulse
Reconciling the Past with the Future

For the last few weeks Bank Indonesia has been busy supporting the rupiah. It appears that the monetary authorities were keen to show a stable situation when Indonesia hosted two major conferences, the World Economic Forum (WEF) and the 60th anniversary of the Asia-Africa conference during that time. But with the country's reserves shrinking, one wonders how long it can afford to do so.

This month the 1Q2015 GDP numbers will be announced, and most are predicting a lackluster five percent growth, far below the government's full year growth target of 5.7 percent. Loan growth has also been subdued, annually growing just 11 percent for this first quarter, much below Bank Indonesia's full year loan growth target of 16-18 percent. The Jakarta Composite Index has also taken a considerable 6.1 percent dive last week with the 1Q2015 earning results of listed companies falling below market expectations.

May 5, 2015