Will 2016 be Better?

It is only a month before the closing of company books for 2015. In retrospect, it has been quite a dismal year. In January, there were high expectations, being the start of President Jokowi's first year in office. But by the year-end, the results were disappointingly far below expectations. This year's economic growth is expected to reach only 4.8-5.0 percent, in contrast to the 6.0 percent target set by the new administration. The Rupiah and the Jakarta Composite Index (JCI), which began the year, respectively at Rp12,500 per US$ and 5,200 points, dropped considerably, settling at Rp13,600 per US$ and 4,500 points by year-end. With sluggish economic growth, businesses have been forced to adjust downward this year's revenue targets. Along with the decline in sales, companies have been busy cutting costs, which at times hurt employment. Unfortunately, the cost cuts are rarely able to match the drop in revenue. As a result, profits have narrowed across the board.

The follow-up question is whether our economy has reached its lowest point and that by next year it should start to recover? In various economic seminars towards year-end, numerous experts are facing difficulty in assessing next year's outlook. Even the optimistic scenario predicts this year's sluggishness will extend till the first half of the year and the recovery to take place only after mid-year. The problem, they argue, is that the level of volatility or uncertainty remains high.

November 17, 2015