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BANK INDONESIAFor further information, please contact:Economic Outlook & Policy DisseminationEconomic Outlook & Policy DisseminationEconomic Outlook & Policy DisseminationEconomic Outlook & Policy DisseminationEconomic Outlook & Policy DisseminationBureau of Monetary PolicyBureau of Monetary PolicyBureau of Monetary PolicyBureau of Monetary PolicyBureau of Monetary PolicyDirectorate of Economic Research and Monetary PolicyDirectorate of Economic Research and Monetary PolicyDirectorate of Economic Research and Monetary PolicyDirectorate of Economic Research and Monetary PolicyDirectorate of Economic Research and Monetary Policy
Telephone : +62 61 3818163+62 21 3818206
Fax. : +62 21 3452489E-mail : [email protected] : http://www.bi.go.id
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MONETARY POLICY REPORTBANK INDONESIA
The Monetary Policy Report is published quarterly by Bank Indonesia after the Board of
Governors» Meetings in January, April, July, and October. In addition to fulfilling the
mandate of article 58 of Act Number 23 of 1999 concerning Bank Indonesia, amended
by Act No. 3 of 2004, the report has two main purposes: (i) to function as a tangible
product of a forward-looking working framework in which formulation of monetary
policy is based on economic and inflation forecasts; and (ii) as a medium for the Board of
Governors of Bank Indonesia to present to the public the various policy considerations
underlying its monetary policy decisions.
The Board of Governors
Boediono Governor
Miranda S. Goeltom Senior Deputy Governor
Hartadi A. Sarwono Deputy Governor
Siti Ch. Fadjrijah Deputy Governor
S. Budi Rochadi Deputy Governor
Muliaman D. Hadad Deputy Governor
Ardhayadi Mitroatmodjo Deputy Governor
Budi Mulya Deputy Governor
MONETARY POLICY REPORTQUARTER III-2008
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MONETARY POLICY REPORTBANK INDONESIA
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MONETARY POLICY REPORTBANK INDONESIA
Monetary Policy Strategy
Basic Principles
• With the ITF, inflation target is the overriding objective and nominal anchor of monetary policy. In this regard, BankIndonesia will apply a forward-looking strategy to steer present monetary policy towards achievement of the medium-term inflation target.
Inflation
• Application of the ITF does not mean that monetary policy will not take account of economic growth. This policy willretain the fundamental paradigm of monetary policy in striking an optimal balance between inflation and economicgrowth in both the establishment of the inflation target and in monetary policy response, which will be targetedtowards low, stable inflation in the medium and long-term.
The Inflation Target
• The Government, after consultation with Bank Indonesia, has established and announced targets for CPI inflationtargets at 8%±1%, 6%±1%, and 5%±1% for 2006, 2007, and 2008 (Based on press release on 17 March 2006from the Coordinating Ministry for Economic Affairs. These inflation targets are consistent with the process ofgradual disinflation towards a medium to long-term inflation target of about 3%, competitive with other nations.
Instruments and Monetary Operations
• The BI Rate is used to convey the monetary policy stance and operational targets. The BI Rate is a one-month interestrate regularly announced by Bank Indonesia for a specific time frame.
• The BI Rate is implemented through open market operations (OMO) using 1-month SBIs. To strengthen theeffectiveness of liquidity control on the market, Fine Tune Operations (FTO) will be carried out on a daily basis usingSBIs and Government Securities as underlying instruments.
Policymaking Process
• The BI Rate is determined by the Board of Governors in the quarterly Board of Governors» Meeting held eachJanuary, April, July, and October. Under certain conditions, if necessary, the BI Rate may be adjusted in the Board ofGovernors» Meeting convened in other months. Changes in the BI Rate are indicative of Bank Indonesia»s assessmentof the inflation forecast in relation to the established inflation target.
Transparency
• From time to time, monetary policy will be communicated through customary media communications, such asstatements to the press and market players, the website, and the publication of the Monetary Policy Report (MPR).This transparency is intended to strengthen understanding and build public expectations of the economic outlookand future inflation as well as the monetary policy response pursued by Bank Indonesia.
Coordination with the Government
• To provide coordination in inflation targeting, monitoring, and control, the Government and Bank Indonesia haveset up a team made up of officials from various relevant agencies. In the course of its work, the Team deliberatesand issues recommendations concerning the necessary policies for both the Government and Bank Indonesia incurbing inflationary pressure to achieve the established inflation target.
Enhanced Monetary Policy MeasuresUnder Inflation Targeting Framework
In July 2005, Bank Indonesia implemented and enhanced monetary policy measures within the Inflation Targeting Framework(ITF) which encompasses four main areas: the use of the BI rate as an operational target, enhanced decision making process,more transparent communications strategy, and strengthened policy coordination with the Government. The measures isintended to strengthen the effectiveness and to provide good governance to its monetary policy making to achieve the pricestability needed to support suistainable economic growth and attain social welfare.
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MONETARY POLICY REPORTBANK INDONESIA
Monetary Policy Report - Quarter III-2008Contents
MONETARY POLICY REPORTBANK INDONESIA
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Contents
1. General Review ........................................................................... 1
2. Latest Macroeconomic Indicators .............................................. 5
Economic Growth .......................................................................... 5
The Balance of Payments ............................................................... 11
3. Monetary Indicators and Policy, Q3/2008 ................................. 14
Inflation ......................................................................................... 14
Rupiah Exchange Rate.................................................................... 16
Monetary Policy ............................................................................. 18
4. Outlook for the Indonesian Economy ....................................... 23
Assumptions and Scenarios ............................................................ 24
Economic Growth Outlook ............................................................. 25
Inflation Forecast ........................................................................... 29
Risks .............................................................................................. 30
5. Monetary Policy Response Q3-2008 .......................................... 31
Statistics .......................................................................................... 32
General Review
1
1. General Review
Inflationary pressure in Indonesia remained strong during Q3/2008. Driving this
were high public expectations of inflation, buoyant domestic demand and the impact
of imported inflation related to the potential for rupiah depreciation brought about
by the US financial crisis. In their policy response to these developments, the Bank
Indonesia Board of Governors sees the need for curbing of inflationary pressure to
achieve the medium-term inflationary target and safeguard the stability of the
economy as a whole.
Q3/2008 was dominated by global financial markets woes and the fallout of these
problems on the Indonesian economy. The world economic slowdown has now
taken hold in several industrialised nations and begun spreading to emerging
markets, including Indonesia. The turmoil on global markets has spread inexorably
further, with the Indonesian economy also affected. Despite Indonesia»s robust
economic fundamentals, the negative sentiment engendered by the crisis prompted
a new wave of capital outflows. This has put pressure on both the stock market
and the rupiah exchange rate. The stock index plunged dramatically alongside
depreciation in the exchange rate. Both developments augur for a pessimistic outlook
for the domestic economy. In response, Bank Indonesia and the Government have
maintained close policy coordination and continue to monitor developments in the
economy on a regular basis.
With conditions still shrouded in these problems, inflation and economic stability
remain the primary focus of Bank Indonesia. Efforts to strike an overall balance
between inflation control and the risk of instability on the money market are
ongoing. To curb inflation, Bank Indonesia has pursued a tight bias monetary stance
by raising the BI Rate 75 bps during Q3/2008 and optimising the use of all monetary
policy instruments at its disposal. The upward movement in the BI Rate was followed
by higher rates for bank time deposit and lending rates. As of August 2008, time
deposit rates had climbed faster than the BI Rate, with rates for working capital
credit and investment credit following suit. Rates for consumption credit, however,
were relatively stable.
Bank Indonesia has kept a close watch on money market liquidity, with several
banks caught in a liquidity squeeze. This tightening was triggered by disparities in
liquidity held by banks, given that liquidity in the banking system was still adequate
overall. Added to this, high-paced bank credit expansion not balanced by sufficient
growth in depositor funds led to a liquidity crunch at some banks. The cautious
stance taken by banks to anticipate the surge in demand in advance of the religious
festivities and low rate of expansion in the government account put added pressure
on liquidity in the banking system. Nevertheless, this tightening of liquidity is
predicted to be temporary. The liquidity squeeze is forecasted to ease after the end
of the Eid-ul-Fitr period, when cash begins returning to the banking system. Added
Monetary Policy Report - Quarter III-2008
2
to this will be the expansionary trend in government accounts during Q4/2008. To
resolve the problem of tight liquidity, Bank Indonesia has pursued a series of measures
through improvements in monetary operations.
Amid the global financial turmoil of Q3/2008 and slowing world economic growth,
the Indonesia economy still managed to chart healthy growth. In preliminary figures,
the GDP grew by 6.3% (yoy) in Q3/2008, following 6.4% growth (yoy) in Q2/
2008. Household consumption was again indicated as the main driving force for
this growth. Vigorous growth in consumption was bolstered by continued strength
of purchasing power and increased availability of consumer finance. Investment,
another component of domestic demand, also recorded high growth, particularly
for non-construction activities. Nevertheless, the slowdown in the world economy
has also taken the edge off Indonesia»s export growth, although growth remains
strong. Alongside this, imports are forecasted to expand rapidly as suggested by
the strength of domestic demand and export production needs.
Global economic developments subsequently put pressure on Indonesia»s balance
of payments in Q3/2008. Export growth is lagging behind that of imports. Imports
maintained a rapid pace of expansion, driven by heavy domestic demand and also
price increases. The combination of the economic slowdown in the developed world
and falling world commodity prices is set to bear down on Indonesia»s export
performance. However, this decline is not expected to be excessive, given that
Indonesia»s exports are natural resource-based and therefore less sensitive to an
economic slowdown in the developed world. In addition, international trade in the
Asia-Pacific region, led by rapid expansion in China and India in recent years, is
adequate to keep exports from steeper decline.
Analysis of the composition of imports reveals that import growth has taken place
mainly in raw materials and capital goods. This in turn will spur growth in domestic
production and production capacity, which will benefit the economy in the medium
to long-term. Leading importers were the industry sector (specifically the chemical
industry subsector, the base metals, iron and steel subsector and the transportation
equipment, machinery and tools subsector) and the transport and communications
sector, both of which have substantial backward and forward linkages.
In the capital and portfolio account, negative sentiment spurred by the turbulence
on global financial markets prompted a wave of capital outflows. In portfolio
investments, foreign capital recorded net outflows. To cover the costs of rising
imports, domestic economic actors have drawn on assets placed overseas and some
have availed foreign financing, as indicated by the other investment component
that recorded net inflows. In the upshot of these developments, international reserves
reached USD57.1 billion, equivalent to 4.2 months of imports and servicing of
official debt.
The outflows of foreign capital put downward pressure on the rupiah during Q3/
2008. Nevertheless, Bank Indonesia kept a close watch on movement in the
General Review
3
exchange rate under the forex market stabilisation policy aimed at mitigating
pressures and easing rupiah volatility. As a result, the average value of the rupiah in
Q3/2008 appreciated further over the earlier period. Measured as a quarterly average,
the rupiah gained 0.47% from Rp 9,259 to the USD to Rp 9,216 to the USD.
Downward pressure began to set in near the end of Q3/2008 as foreign investor
behaviour came under the influence of global economic developments. Risk aversion
among investors led to pressure on the rupiah. Downward pressure was also
sustained by regional currencies that weakened from the spillover effects of external
turbulence. On the other hand, the rupiah still offered attractive investment yields,
reflected in the broad interest rate differential. This in turn eased pressures and
helped stem further capital outflows from rupiah instruments.
In related developments, the Indonesian Composite Index (IDX) closed at 1,832 at
the end of the period under review (September 2008), a drop of 21.9% compared
to end Q2/2008. The disappointing Q3/2008 performance of the IDX Index is
explained more by the influence of deteriorating global financial markets as more
and more international financial institutions faced bankruptcy.
Looking forward, economic growth is predicted to remain at a healthy 6.2%-6.4%
amid the turmoil besetting the world economy in 2008 before tapering off slightly
in 2009. The continued strength of economic growth is driven primarily by domestic
demand. In turn, domestic demand is not only supported by availability of financing,
but also the continued strength of public purchasing power. Household consumption
is forecasted to maintain momentum. At the same time, investment growth is
being fuelled mainly by non-construction investment. Externally, the fast-rising
imports of capital goods and raw materials are expected to boost the future capacity
of the Indonesian economy. Underlying this optimism are the substantial multiplier
effects on the economy in the industry sectors importing these capital goods and
raw materials. On the other hand, growth in exports of goods and services is
forecasted to decline in keeping with the slowdown in the world economy and
falling international commodity prices. Inflationary pressure is also predicted to
remain high during the coming months. CPI inflation in 2008 is forecasted in the
range of 11.5%-12.5% (yoy). In 2009, inflationary pressure is expected to ease
midway through the year in response to the current monetary policy stance and
falling imported inflation as international commodity prices maintain a downward
trend. Accordingly, inflation in 2009 is forecasted in the range of 6.5%-7.5% (yoy).
Looking forward, the Indonesian economy is also confronted by various risks. These
risks are explained largely by developments in the world economy, and most
importantly the outworking of the global financial crisis. Economic growth may
take a downward bias due to the crisis, which is also likely to affect balance of
payments performance given the potential for falling international commodity prices.
Within the future policy framework, Bank Indonesia will focus on efforts to curb
the risk of inflation while avoiding excessive disruption to the upward trend in
economic growth. To this end, Bank Indonesia will continue to implement a prudent,
Monetary Policy Report - Quarter III-2008
4
measured monetary policy stance while sustaining the momentum for economic
growth. The decision of the BI Board of Governors to raise the BI Rate a further 25
bps to 9.5% in October 2008 was based primarily on this reasoning. In regard to
financial stability, the Bank Indonesia policy is also expected to safeguard the stability
of the domestic financial system. The policy will also be reinforced by more optimum
use of other monetary instruments, such as forex market interventions to minimise
volatility in the rupiah exchange rate and maintain adequate liquidity on the money
market. Bank Indonesia will maintain a close watch and monitor global economic
developments and make immediate policy adjustments if necessary to safeguard
macroeconomic stability and achievement of the medium to long-term inflation
target.
Latest Macroeconomic Indicators
5
2. Latest Macroeconomic Indicators
Amid the uncertainties of global economic developments, the Indonesian economy
continued to chart high growth in Q3/2008, albeit down slightly from the preceding
quarter. The high rate of growth was bolstered by vigorous domestic demand and
especially household consumption. Household consumption maintained reasonably
brisk growth, albeit slightly less than in the preceding quarter. Supporting this was
relative stability in public purchasing power and an upswing in consumer confidence.
However, preliminary figures for exports suggest that growth was held back by
weakening economic conditions in key developed nations. Consistent with slowing
export performance, figures also point to modest decline in investment growth
momentum. However, this slowdown is not expected to have excessive impact,
given the continued robust growth in household consumption and improving
business optimism for future economic conditions. On the other hand, indicators
suggest that import growth was curbed to some extend by the effects of slowing
exports and investment.
On the supply side, key sectors driving the economy maintained relatively stable
growth in preliminary figures with the exception of agriculture, which shed some
growth. Nevertheless, the slowing growth in agriculture was adequately offset by
high growth in non-tradable sectors such as transport and telecommunications
and services and resumption of positive growth in the mining sector. Based on this
assessment, third quarter growth in the Gross Domestic Product (GDP) reached an
estimated 6.3% (yoy).
ECONOMIC GROWTH
Indonesia charted another quarter of strong growth in preliminary figures for Q3/
2008, consistent with the high growth outcome for the preceding quarter. Despite
this, various indicators point to slowing growth, even though
significant downturn is not suggested. Accordingly, GDP growth
in Q3/2008 is estimated at 6.3% (yoy) (Graph 2.1).
Aggregate Demand
On the demand side, Q3/2008 GDP growth was again high,On the demand side, Q3/2008 GDP growth was again high,On the demand side, Q3/2008 GDP growth was again high,On the demand side, Q3/2008 GDP growth was again high,On the demand side, Q3/2008 GDP growth was again high,
bolstered to strong domestic demand and especially consumptionbolstered to strong domestic demand and especially consumptionbolstered to strong domestic demand and especially consumptionbolstered to strong domestic demand and especially consumptionbolstered to strong domestic demand and especially consumption
(Table 2.1). (Table 2.1). (Table 2.1). (Table 2.1). (Table 2.1). The relative stability in public purchasing power,
improving consumer optimism and seasonal factors with the
religious festivities provided an added boost to household
consumption growth. However, the accelerated export growth
in the preceding quarter is expected to let up slightly in the figures
for Q3/2008 due to the slowdown in the global economy and
falling prices for oil and other commodities. Consistent with this
Graph 2.1
Growth of Gross Domestic Product (GDP)
% y-o-y
2005 2006 2007 2008I II III IV
5.0
6.0
7.0
6.5
5.5
4.5I II III IV I II III IV I II III*
Monetary Policy Report - Quarter III-2008
6
Graph 2.2
Leading Indicators of Private Consumption
%Y-o-Y, Base Year 2000
2005
I II III IV I II III IV I II III IV I II III*I t e m
Table 2.1
Economic Growth - Demand Side
20052007
* Bank Indonesia Projection figures
Total Consumption 2.0 2.6 5.5 6.7 4.3 3.8 5.6 2.8 3.5 3.9 4.6 4.6 5.3 5.1 4.9 5.6 4.9 5.0
Private Consumption 3.4 3.8 4.4 4.2 4.0 2.9 3.0 3.0 3.8 3.2 4.7 4.7 5.1 5.6 5.0 5.7 5.3 5.1
Government Consumption -9.6 -6.7 14.7 24.9 6.6 11.5 28.8 1.7 2.2 9.6 3.7 3.8 6.5 2.0 3.9 4.7 2.2 4.5
Total Investment 14.9 16.7 10.4 2.7 10.9 1.4 0.9 0.8 6.8 2.5 7.0 6.9 10.4 12.1 9.2 15.4 12.8 12.0
Domestic Demand 5.0 5.9 6.7 5.7 5.8 3.2 4.4 2.3 4.3 3.5 5.2 5.2 6.6 6.8 6.0 8.0 6.9 6.8
Export of Goods and Services 22.0 17.6 12.3 15.6 16.6 11.8 11.4 8.3 6.6 9.4 8.1 9.8 6.9 7.3 8.0 15.5 16.1 15.8
Import of Goods and Services 22.2 23.6 17.7 8.9 17.8 4.8 9.3 10.9 9.2 8.6 8.5 6.5 7.0 13.6 8.9 17.8 16.7 16.0
GDPGDPGDPGDPGDP 6.06.06.06.06.0 5.95.95.95.95.9 5.85.85.85.85.8 5.15.15.15.15.1 5.75.75.75.75.7 5.15.15.15.15.1 5.05.05.05.05.0 5.95.95.95.95.9 6.06.06.06.06.0 5.55.55.55.55.5 6.16.16.16.16.1 6.46.46.46.46.4 6.56.56.56.56.5 6.36.36.36.36.3 6.36.36.36.36.3 6.36.36.36.36.3 6.46.46.46.46.4 6.36.36.36.36.3
200720082006
2006
trend, some slackening is also expected in investment growth
and import growth.
In estimates, household consumption maintained robustIn estimates, household consumption maintained robustIn estimates, household consumption maintained robustIn estimates, household consumption maintained robustIn estimates, household consumption maintained robust
expansion, although down slightly from the preceding quarterexpansion, although down slightly from the preceding quarterexpansion, although down slightly from the preceding quarterexpansion, although down slightly from the preceding quarterexpansion, although down slightly from the preceding quarter
as suggested by leading indicators (Graph 2.2). In Q3/2008,
growth in household consumption reached 5.1% (yoy) in
preliminary figures on the strength of relative stability in public
purchasing power and improved consumer confidence. Also
contributing to the strong growth in household consumption
was expanded consumer financing extended by banks and other
finance institutions. Consumption of durable goods, such as
electronics and motor vehicles, maintained vigorous expansion.
Growth in consumer goods imports was also quite strong early
in Q3/2008. At the same time, the findings of the Bank Indonesia
Consumer Survey point to an upsurge in consumer confidence
(Graph 2.3), largely attributable to rising income expectations
and availability of jobs. This indicates that the public has begun
to recover from the impact of the fuel price hike, despite the
looming threat of diminished sources of income. Also pointing
to relatively stable conditions was the upward movement in the
retail sales index. The stable index growth is largely the result of
real sales growth in the household articles and the clothing and
accessories categories.
Estimated investment growth in Q3/2008 is slightly down fromEstimated investment growth in Q3/2008 is slightly down fromEstimated investment growth in Q3/2008 is slightly down fromEstimated investment growth in Q3/2008 is slightly down fromEstimated investment growth in Q3/2008 is slightly down from
the preceding quarter, in line with the trend in investment leadingthe preceding quarter, in line with the trend in investment leadingthe preceding quarter, in line with the trend in investment leadingthe preceding quarter, in line with the trend in investment leadingthe preceding quarter, in line with the trend in investment leading
indicators (Graph 2.4). indicators (Graph 2.4). indicators (Graph 2.4). indicators (Graph 2.4). indicators (Graph 2.4). However, no significant decline is expected
in view of the relatively stable public purchasing power and
growing business optimism for future economic conditions.
Reinforcing this confidence were developments in several leading
Graph 2.3
Consumer Confidence Index √ BI Consumer Survey
Expectation ConsumerPresent Situatuions Index (PSI)
Consumer Confidence Index
Index
60
70
80
90
100
110
120
2005 2006 2007 20081 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9
optimistic
pessimistic
gGDPHousehold Consumer2 (Reference Series) and Cli1
Import of Consumer Goods, Real M1, CPI
99
99
99
100
100
100
100
100
101
gGDPHousehold Consumer2 CLI97.50
98.00
98.50
99.00
99.50
100.00
100.50
101.00
101.50
2002 2003 2004 2005 2006 2007 2008 2009I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I
Latest Macroeconomic Indicators
7
investment indicators, such as relatively strong imports of capital
goods and investment credit expansion (Graph 2.5). Investment
in Q3/2008 is therefore estimated to have charted 12% growth
(yoy).
Analysed by component, Q3/2008 investment growth wasAnalysed by component, Q3/2008 investment growth wasAnalysed by component, Q3/2008 investment growth wasAnalysed by component, Q3/2008 investment growth wasAnalysed by component, Q3/2008 investment growth was
supported by vigorous growth in non-construction investmentsupported by vigorous growth in non-construction investmentsupported by vigorous growth in non-construction investmentsupported by vigorous growth in non-construction investmentsupported by vigorous growth in non-construction investment
(Graph 2.6)(Graph 2.6)(Graph 2.6)(Graph 2.6)(Graph 2.6). Indications of this are evident in renewed increase
in the production index for the domestic machinery industry
alongside high growth in imports of capital goods. In contrast,
cement consumption, a key indicator relevant to construction
investment, showed some decline.
On the other hand, indications of business interest in investmentOn the other hand, indications of business interest in investmentOn the other hand, indications of business interest in investmentOn the other hand, indications of business interest in investmentOn the other hand, indications of business interest in investment
remain strongremain strongremain strongremain strongremain strong. The business tendency index published in a survey
by the Central Statistics Agency (BPS) points to improvement,
reflected in rising orders for input goods and domestic and foreign
orders in Q3/2008 (Graph 2.7). The findings of the Business
Confidence Survey (SKDU) also point to a growing number of
business actors interested in investing during the second half of
2008. Even so, investment continues to be hampered by such
factors as interest rates, licensing and access to bank credit.
Exports again recorded high growth in preliminary figures forExports again recorded high growth in preliminary figures forExports again recorded high growth in preliminary figures forExports again recorded high growth in preliminary figures forExports again recorded high growth in preliminary figures for
Q3/2008, albeit down slightly from the preceding quarter.Q3/2008, albeit down slightly from the preceding quarter.Q3/2008, albeit down slightly from the preceding quarter.Q3/2008, albeit down slightly from the preceding quarter.Q3/2008, albeit down slightly from the preceding quarter.
Weakening export growth was closely linked to the world
economic slowdown and falling international commodity prices,
particularly for agricultural and mining products. In the preceding
quarter, export demand from emerging market countries such
as China and India contributed significantly to Indonesia»s export
growth, but this demand gradually slackened due to depressed
growth in advanced economies. Nevertheless, the cumulative
measure of exports for January-August 2008 was still high at
USD95.45 billion, representing 29.87% growth (yoy) over the
same period in 2007. Accordingly, preliminary figures for Q3/
2008 suggest export growth at 15.8% (yoy), buoyed mainly by
agricultural and mining products (Graph 2.8).
Imports are expected to show slightly less vigorous expansion inImports are expected to show slightly less vigorous expansion inImports are expected to show slightly less vigorous expansion inImports are expected to show slightly less vigorous expansion inImports are expected to show slightly less vigorous expansion in
Q3/2008 in keeping with the softening performance of exportsQ3/2008 in keeping with the softening performance of exportsQ3/2008 in keeping with the softening performance of exportsQ3/2008 in keeping with the softening performance of exportsQ3/2008 in keeping with the softening performance of exports
and investment (Graph 2.9). and investment (Graph 2.9). and investment (Graph 2.9). and investment (Graph 2.9). and investment (Graph 2.9). Despite this, no major downturn in
import growth is expected, given the continued strength of
household consumption and improving business optimism for
future economic conditions. Preliminary figures for Q3/2008 place
import growth at 16.0% (yoy), down from the earlier quarter.
Analysed by category of goods, import growth was driven mainly
Graph 2.4
Investment Leading Indicators
Graph 2.5
Real Investment Credit Growth
Gross Fixed Capital Formation2 (Reference Series) and Cli1
IPI, Sales Commercial Car, IPI Machinery and Equipment, IndustrialElectricity Consumption, Cement Consumption
99
99
100
100
101
101
102
102
2002 2003 2004 2005 2006 2007 2008I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I
Gross Fixed Capital Formation2 CLI
II III IV
(%)
-25.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0(%)
2005 2006 2007 20081 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9
Gross Fixed Capital Formation (y-o-y)Real Invesment Credit_Seasonal Adjusted_CMA (m-t-m)Real Invesment Credit (y-o-y)
Graph 2.6
Construction and Non-Construction
Investment Growth
(%,yoy)
0
2
4
6
8
10
12
14
16
18
-30
-20
-10
0
10
20
30
40
50
2005 2006* 2007** 2008***
(%,yoy)
I II III IV I II III IV I II III IV I II III
Manufacturing
Non Manufacturing
Gross Fixed Capital Formation (rhs)
Monetary Policy Report - Quarter III-2008
8
by raw materials and capital goods. In the latest data released
by BPS, cumulative imports for the January-August 2008 period
reached USD89.83 billion, an increase of 91.19% (yoy) over the
same period in 2007.
Government Financial Operations
Government financial operations in Q3/2008 (July-August) againGovernment financial operations in Q3/2008 (July-August) againGovernment financial operations in Q3/2008 (July-August) againGovernment financial operations in Q3/2008 (July-August) againGovernment financial operations in Q3/2008 (July-August) again
produced a budget surplus. produced a budget surplus. produced a budget surplus. produced a budget surplus. produced a budget surplus. In Q3/2008 (July-August), the budget
surplus reached Rp 20 trillion (0.5% of GDP), which compares
to the deficit of 0.1% of GDP recorded for the same period one
year before. Accordingly, realised Government financial
operations during the first eight months of 2008 charted a surplus
at Rp 81.8 trillion, equal to 1.8% of GDP. This was considerably
higher than the surplus for the same period in 2007 at Rp 14
trillion (0.1% of GDP).
The hefty surplus came as the result of considerably improved
revenue performance compared to the same period last year. At
end-Q3/2008, total revenues and grants stood 67.9% of the
Revised 2008 Budget target, well ahead the same period in 2007
when revenues and grants came to 57.9% of the Revised 2007
Budget. The improvement in state revenues was achieved mainly
in taxation, non-tax revenues from oil and natural gas resources,
profit share from SOEs and other non-tax revenues.
On the expenditures side, Budget implementation has justOn the expenditures side, Budget implementation has justOn the expenditures side, Budget implementation has justOn the expenditures side, Budget implementation has justOn the expenditures side, Budget implementation has just
reached 53.2% of the Revised 2008 Budget, largely on par withreached 53.2% of the Revised 2008 Budget, largely on par withreached 53.2% of the Revised 2008 Budget, largely on par withreached 53.2% of the Revised 2008 Budget, largely on par withreached 53.2% of the Revised 2008 Budget, largely on par with
the outcome for the same period one year earlier at 51.5% ofthe outcome for the same period one year earlier at 51.5% ofthe outcome for the same period one year earlier at 51.5% ofthe outcome for the same period one year earlier at 51.5% ofthe outcome for the same period one year earlier at 51.5% of
the Revised 2007 Budgetthe Revised 2007 Budgetthe Revised 2007 Budgetthe Revised 2007 Budgetthe Revised 2007 Budget. Budget expenditure absorption in Q3/
2008 was again dominated by transfer payments with subsidies
at Rp 52.1 trillion, including Rp 31.3 trillion for the fuel subsidy.
Line ministry/government agency expenditure items, i.e.
personnel expenditures, material expenditures and capital
expenditures, did not undergo significant expansion. Concerning
regional expenditures, Transfers to the Regions were lower during
the period under review compared to the same period one year
before. These funds were derived mainly from Profit Sharing
Funds, Special Allocation Funds and Special Autonomy and Fiscal
Balance Funds. Measured for the whole year, Transfers to the
Regions reached only 55.2% of target in the Revised 2008
Budget. This was down from the same period in 2007, when
these transfers reached 61.2% of target.
Concerning budget financing, the less conducive conditions onConcerning budget financing, the less conducive conditions onConcerning budget financing, the less conducive conditions onConcerning budget financing, the less conducive conditions onConcerning budget financing, the less conducive conditions on
financial markets have exacerbated the constraints on issuingfinancial markets have exacerbated the constraints on issuingfinancial markets have exacerbated the constraints on issuingfinancial markets have exacerbated the constraints on issuingfinancial markets have exacerbated the constraints on issuing
Graph 2.7
Business Sentiment - BPS
Graph 2.8
Export Growth by Sector
0
5
10
15
20
25
(%) (%)
I II III IV I II III IV I II III IV I II III IV I II III2004 2005 2006 2007 2008
-50
-20
10
40
70
100
130gExport (yoy) rhs agriculture export
industry export mineral export
Graph 2.9
Leading Import Indicators
imp_gdp (Reference Series) and Cli1
98
99
99
100
100
101
101
102
102
2002 2003 2004 2005 2006 2007 2008I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II
imp_gdp
CLI
99.2
99.4
99.6
99.8
100.0
100.2
100.4
100.6
100.8
III IV
Industrial Production Index, Volume of Industrial Electricity, Automotive Production,Japan Manufacturing Index, Paper/Paper Products Production Index, Clothing and, Rp toAccessories Production Index, Korea Production and Services Index, Rp to USD,Rp to JPY, Real Consumption Credit, Real M1
Index
2005 2006 2007 2008
80
90
100
110
120
130
140
80
90
100
110
120
130Index
2004I* II* III* IV* I* II* III* IV* I* II* III* IV* I* II* III* IV* I* II* III*
BTI Real Sales Price (Rhs)Input Goods OrderForeign OrderDomestic Order
Latest Macroeconomic Indicators
9
Government Securities.Government Securities.Government Securities.Government Securities.Government Securities. The increased yield on Government Securities, all to be
expected in the present conditions of global financial market turmoil and tight
liquidity since mid-way through the period under review, have impacted issuances
of Government Securities. For year-to-date, net issuance of Government Securities
is only at 87% of the targeted level in the Revised 2008 Budget.1
Government consumption and investment is estimated to have charted moreGovernment consumption and investment is estimated to have charted moreGovernment consumption and investment is estimated to have charted moreGovernment consumption and investment is estimated to have charted moreGovernment consumption and investment is estimated to have charted more
vigorous growth in Q3/2008 compared to Q2/2008vigorous growth in Q3/2008 compared to Q2/2008vigorous growth in Q3/2008 compared to Q2/2008vigorous growth in Q3/2008 compared to Q2/2008vigorous growth in Q3/2008 compared to Q2/2008. In July-August 2008, Central
Government expenditures and Transfers to the Regions measured 65.5% against
projections, indicating that the targeted Government consumption for Q3/2008
was achievable. However, the low rate of capital expenditures, only at 53% of the
budget projection, indicates that Government investment in Q3/2008 will fall short
of projects even though Transfers to the Regions are estimated to be on track.
Nevertheless, the overall rate of realised Government investment in Q3/2008 is
expected to surpass the levels reached in Q2/2008.
Aggregate Supply
Consistent with supply-side developments, the economy is estimated to haveConsistent with supply-side developments, the economy is estimated to haveConsistent with supply-side developments, the economy is estimated to haveConsistent with supply-side developments, the economy is estimated to haveConsistent with supply-side developments, the economy is estimated to have
maintained strong supply-side growth during Q3/2008. maintained strong supply-side growth during Q3/2008. maintained strong supply-side growth during Q3/2008. maintained strong supply-side growth during Q3/2008. maintained strong supply-side growth during Q3/2008. In preliminary figures, most
economic sectors charted high growth (Table 2.2). The leading growth sectors,
manufacturing and trade, hotels and restaurants, maintained relatively stable
performance with growth at 4.0% (yoy) and 7.8% (yoy). Despite this, the agriculture
sector recorded lower estimated growth at 2.1% (yoy) as expected with the passing
of the harvest season. On the other hand, estimated growth in other sectors, such
as transport and communications, the electricity, gas and water utilities sector and
construction, was again strong at 19.5% (yoy), 11.0% (yoy) and 8.1% (yoy).
Supporting these sectoral growth estimates were various sectoral indicators generally
pointing to improvement, such as the capacity utilisation based on the Bank Indonesia
Production Survey and the machinery and tools production index. The findings of
the Business Tendencies Survey conducted by BPS also indicate positive sentiment
in business expectations during Q3/2008, fuelled by increased domestic and foreign
orders and orders of input goods. Alongside this, capacity utilisation in the Business
Survey was relatively stable. Analysis of sectoral distribution shows that
manufacturing, the trade, hotels and restaurants sector and agriculture were again
the dominant areas of economic activity. However, when analysed by contribution
to GDP growth, the leading sectors were transport and communications, the trade,
hotels and restaurants sector and manufacturing.
Manufacturing maintained relatively stable growth in Q3/2008 at 4.0% (yoy). Manufacturing maintained relatively stable growth in Q3/2008 at 4.0% (yoy). Manufacturing maintained relatively stable growth in Q3/2008 at 4.0% (yoy). Manufacturing maintained relatively stable growth in Q3/2008 at 4.0% (yoy). Manufacturing maintained relatively stable growth in Q3/2008 at 4.0% (yoy). Rising
demand driven by the religious festive season at end-Q3/2008 was on factor spurring
growth, particularly in the food, beverages and tobacco industry subsector and the
textile industry subsector. In addition, some leading indicators for industry, such as
1 Based on cash proceeds paid into the Government account at Bank Indonesia.
Monetary Policy Report - Quarter III-2008
10
the Manufacturing Production Index released by BPS, maintained stable movement.
Also reflecting this was the stable level of vehicle production. In contrast, the
Production and Capacity Utilisation Index in the Bank Indonesia Production Survey
showed a rising trend. Financial statements of several industrial companies reported
improvement, with sales growth matched by increased inventory. As regards
financing, the industry sector continued to show credit expansion. Another leading
indicator, the high level of bank lending to industry as of mid-Q3/2008, offers
further confirmation of industry sector growth.
The trade, hotels and restaurants sector recorded another quarter of strong growthThe trade, hotels and restaurants sector recorded another quarter of strong growthThe trade, hotels and restaurants sector recorded another quarter of strong growthThe trade, hotels and restaurants sector recorded another quarter of strong growthThe trade, hotels and restaurants sector recorded another quarter of strong growth
at an estimated 7.8% (yoy) for Q3/2008. at an estimated 7.8% (yoy) for Q3/2008. at an estimated 7.8% (yoy) for Q3/2008. at an estimated 7.8% (yoy) for Q3/2008. at an estimated 7.8% (yoy) for Q3/2008. Vigorous household consumption,
especially in advance of the religious festivities at the end of Q3/2008, was one
factor driving growth in the trade, hotels and restaurants sector. Furthermore, some
leading indicators for trade, hotels and restaurants also provide confirmation of
high growth. As of early Q3/2008, the Bank Indonesia Retail Index maintained
stable growth. Similar upward trends were also visible in the corporate sales and
inventory within the trade sector to the end of Q2/2008. The indicator for the
hotels subsector, i.e. hotel occupancy rates in Jakarta and Bali, showed relatively
stable growth as of end-Q2/2008. In regard to financing, bank lending to the trade
sector maintained brisk expansion in activity until mid-Q3/2008.
Growth in the agriculture sector slowed from the preceding quarter to an estimatedGrowth in the agriculture sector slowed from the preceding quarter to an estimatedGrowth in the agriculture sector slowed from the preceding quarter to an estimatedGrowth in the agriculture sector slowed from the preceding quarter to an estimatedGrowth in the agriculture sector slowed from the preceding quarter to an estimated
2.1% (yoy) in Q3/2008. 2.1% (yoy) in Q3/2008. 2.1% (yoy) in Q3/2008. 2.1% (yoy) in Q3/2008. 2.1% (yoy) in Q3/2008. The less vigorous growth in the agriculture sector is
explained, among others, by the end of the rice harvest. Added to this, the slowdown
in the estates subsector caused by falling export demand put further brakes on
agriculture sector performance. Nevertheless, the foodcrops subsector remained
stable as demonstrated by the relatively stable figures released by BPS for rice
production (ARAM II - 2008) compared to the preceding year. Reinforcing this was
the high growth in agriculture sales and inventory as of Q2/2008. In the financing
%Y-o-Y, Base Year 2000
I II III IV I II III IV I II III*S e c t o r
Table 2.2
Economic Growth - Supply Side
2007
* Bank Indonesia Projection figures
Agriculture 6.6 1.6 2.6 2.6 3.4 -1.7 4.7 7.6 3.1 3.5 6.1 4.6 2.1
Mining and Quarrying 2.3 3.6 1.1 0.0 1.7 6.2 3.2 1.0 -2.1 2.0 -1.9 -0.9 1.0
Manufacturing 3.0 3.6 5.9 5.8 4.6 5.2 5.1 4.5 3.8 4.7 4.2 4.1 4.0
Electricity, Gas and Water Supply 5.1 4.5 5.8 7.7 5.8 8.2 10.2 11.3 11.8 10.4 12.6 11.2 11.0
Construction 7.7 8.5 8.5 8.6 8.3 8.4 7.7 8.3 9.9 8.6 7.9 8.0 8.1
Trade, Hotels and Restaurants 4.9 5.9 7.9 7.0 6.4 9.2 7.6 7.9 9.1 8.5 7.1 7.9 7.8
Transportation and Communication 12.0 13.8 14.5 17.0 14.4 13.0 12.7 14.1 17.4 14.4 20.3 19.6 19.5
Financial, Rental and Business Services 5.6 5.2 4.5 6.5 5.5 8.1 7.6 7.6 8.6 8.0 8.2 8.7 8.5
Services 5.8 6.0 6.7 6.2 6.2 7.0 7.0 5.2 7.2 6.6 5.6 6.5 7.3
GDPGDPGDPGDPGDP 5.15.15.15.15.1 5.05.05.05.05.0 5.95.95.95.95.9 6.06.06.06.06.0 5.55.55.55.55.5 6.16.16.16.16.1 6.46.46.46.46.4 6.56.56.56.56.5 6.36.36.36.36.3 6.36.36.36.36.3 6.36.36.36.36.3 6.46.46.46.46.4 6.36.36.36.36.3
200720082006
2006
Latest Macroeconomic Indicators
11
area, indications of slowing agriculture performance were also reflected in the
downturn in agriculture sector lending during mid-Q3/2008.
Q3/2008 growth in the mining sector is estimated at a positive 1.0% (yoy), evenQ3/2008 growth in the mining sector is estimated at a positive 1.0% (yoy), evenQ3/2008 growth in the mining sector is estimated at a positive 1.0% (yoy), evenQ3/2008 growth in the mining sector is estimated at a positive 1.0% (yoy), evenQ3/2008 growth in the mining sector is estimated at a positive 1.0% (yoy), even
though not fully reflected in leading indicators. though not fully reflected in leading indicators. though not fully reflected in leading indicators. though not fully reflected in leading indicators. though not fully reflected in leading indicators. Mining performance was bolstered
by exports of coal, metal ores, clinker and concentrates, alongside indications of
rising aluminium exports. However, mining sales and inventory still showed a
downward trend. As regards financing, lending growth in the mining sector was
marked by slowing momentum.
The transport and communications sector again forged ahead in Q3/2008 withThe transport and communications sector again forged ahead in Q3/2008 withThe transport and communications sector again forged ahead in Q3/2008 withThe transport and communications sector again forged ahead in Q3/2008 withThe transport and communications sector again forged ahead in Q3/2008 with
growth estimated at 19.5% (yoy). growth estimated at 19.5% (yoy). growth estimated at 19.5% (yoy). growth estimated at 19.5% (yoy). growth estimated at 19.5% (yoy). The continued strength of growth in this sector
is attributable largely to performance in the communications subsector, reflected in
ongoing growth trend in cellular telephone subscribers during Q2/2008. Alongside
this, the transportation subsector also showed signs of an upward trend, reflected
in rising numbers of rail passengers. Financing in the transport and communications
sector maintained growth with credit expansion on the rise. The high rate of credit
expansion in this sector was driven mainly by the telecommunications subsector,
where strong prospects are underpinned by the still enormous potential market.
The construction sector achieved estimated Q3/2008 growth at 8.1% (yoy).The construction sector achieved estimated Q3/2008 growth at 8.1% (yoy).The construction sector achieved estimated Q3/2008 growth at 8.1% (yoy).The construction sector achieved estimated Q3/2008 growth at 8.1% (yoy).The construction sector achieved estimated Q3/2008 growth at 8.1% (yoy).
Confirming the growth in this sector were various indicators, such as growth in
commercial property construction. From the financing side, loan disbursements for
property credit and construction credit maintained stable growth, even surpassing
the averages of 2007.
THE BALANCE OF PAYMENTS
Strong economic growth and the onset of decline in world commodity prices led toStrong economic growth and the onset of decline in world commodity prices led toStrong economic growth and the onset of decline in world commodity prices led toStrong economic growth and the onset of decline in world commodity prices led toStrong economic growth and the onset of decline in world commodity prices led to
changes in performance of the balance of payments, most importantly in the currentchanges in performance of the balance of payments, most importantly in the currentchanges in performance of the balance of payments, most importantly in the currentchanges in performance of the balance of payments, most importantly in the currentchanges in performance of the balance of payments, most importantly in the current
account. account. account. account. account. The current account began to record a deficit as a result of continued
strength of imports. Leading in import growth were imports of capital goods and
raw materials in support of investment and production. In a similar vein, the capital
and financial account sustained pressure from the shift in investor interest in response
to the turbulence on global financial markets. In the final outcome, international
reserves reached USD57.1 billion, equivalent to 4.2 months of imports and servicing
of official debt. Measured annually, indicators of external vulnerability showed further
improvement with the continued positive performance in exports and subdued
foreign debt indicators. Like before, the condition of external balances was conducive
to Indonesia»s economic performance.
The Current Account
In preliminary figures for Q3/2008, the current account came under pressure fromIn preliminary figures for Q3/2008, the current account came under pressure fromIn preliminary figures for Q3/2008, the current account came under pressure fromIn preliminary figures for Q3/2008, the current account came under pressure fromIn preliminary figures for Q3/2008, the current account came under pressure from
accelerated import growth that outpaced the rise in exportsaccelerated import growth that outpaced the rise in exportsaccelerated import growth that outpaced the rise in exportsaccelerated import growth that outpaced the rise in exportsaccelerated import growth that outpaced the rise in exports. Driving the high rate
of import growth was strong inflation in trading partners, in addition to the continued
Monetary Policy Report - Quarter III-2008
12
robust domestic demand. Leading in import growth were imports of capital goods
and raw materials in support of investment and production. On the other hand,
despite indications of slowdown, exports maintained positive performance.
Indonesia»s exports to several developed nations continued to rise, as to be expected
with the nature of Indonesia»s resource-based and low-end technology exports
that are less sensitive to changing incomes in developed countries. The slowing
trend in export growth resulted mainly from the downward trend in international
commodity prices.
Based on data for the January-August 2008 period, non-oil and gas exports
reached USD72.9 billion, representing growth of 19.3% (yoy) over the same period
one year before. The high rate of export growth was driven by growth in
agricultural and industrial exports at 37.5% and 22.8%. In contrast, mining
commodities slowed considerably, with export growth at a mere 0.8% over the
same period last year. This is explained by a drop in coal exports brought on by
the shift to meeting growing domestic energy needs and the onset of decline in
international metal prices. On the other hand, non-fossil fuel imports for January-
August 2008 mounted 42.6% (yoy) to USD67.5 billion, with import growth for
consumer goods, raw materials and capital goods recorded at 29.9%, 41.6%
and 55.6% respectively. The growth in non-fossil fuel imports is expected to
benefit the domestic economy, given that since 2006, positive trends in import
growth have been positively correlated with growth in consumption and
investment.
In the oil and gas sector, the trade balance was strengthened by gas exports. During
January-July 2008, oil and natural gas exports reached US$10.4 billion and US$10.1
billion, up 64.0% and 58.2% over the same period one year earlier. On the other
hand, soaring prices resulted in spiralling oil imports during January-July 2008 (up
72.7%, yoy), pushing Indonesia»s oil trade deficit for that period to USD6.2 billion.
Despite this, with the solid performance in gas exports, the oil and gas sector still
managed a surplus of USD3.9 billion.
The Capital and Financial Account
In preliminary figures, the capital and financial account recorded yet another surplusIn preliminary figures, the capital and financial account recorded yet another surplusIn preliminary figures, the capital and financial account recorded yet another surplusIn preliminary figures, the capital and financial account recorded yet another surplusIn preliminary figures, the capital and financial account recorded yet another surplus
in Q3/2008in Q3/2008in Q3/2008in Q3/2008in Q3/2008. The primary source of the capital and financial account surplus is the
withdrawal of corporate assets held overseas and drawing on private foreign
borrowings to finance rising imports. Besides this, the relative domestic
macroeconomic stability amid turbulence on global financial markets and the
incentive of high yields paved the way for inflows of foreign capital on the
Government Securities market. Offsetting this was the shift in foreign investor
preferences and flight to quality triggered by the global financial market woes,
which put mounting pressure on the capital and financial account.
Latest Macroeconomic Indicators
13
International Reserves
In response to the developments in the current account and the capital and financial
account, international reserves at end-Q3/2008 stood at USD57.1 billioninternational reserves at end-Q3/2008 stood at USD57.1 billioninternational reserves at end-Q3/2008 stood at USD57.1 billioninternational reserves at end-Q3/2008 stood at USD57.1 billioninternational reserves at end-Q3/2008 stood at USD57.1 billion, equivalent
to 4.2 months of imports and servicing of official debt.
Monetary Policy Report - Quarter III-2008
14
3. Monetary Indicators and Policy,Q3/2008
Developments in the Indonesian economy were marked by a series of external and
internal shocks during Q3/2008. Inflationary pressure remained high, fuelled by
robust domestic demand and high inflation expectations. The annual measure of
CPI inflation was again markedly higher in comparison to Q2/2008. Q3/2008 CPI
inflation was recorded at 2.88% (qtq) or 12.14% (yoy). Despite the increase in
annual CPI inflation (yoy), quarterly inflation (qtq) in the CPI showed some movement
in return to the normal trend. The average rupiah exchange rate for Q3/2008
appreciated 0.47% from Rp 9,259/USD to Rp 9,216/USD albeit with a build-up of
downward pressure at the end of the period. Stable macroeconomic conditions,
the continued attractiveness of rupiah-denominated yields and broad interest rate
differential proved adequate to rein in capital outflows from rupiah instruments
and prevent the rupiah from steeper decline.
To safeguard macroeconomic stability, Bank Indonesia decided to raise the BI Rate
75 bps to 9.25% at end-Q3/2008. This rate policy was bolstered by a range of
actions to maintain rupiah stability and other measures designed to reinforce
monetary control operations.
INFLATION
Monthly inflation maintained a rising trend during Q3/2008, mainly in response toMonthly inflation maintained a rising trend during Q3/2008, mainly in response toMonthly inflation maintained a rising trend during Q3/2008, mainly in response toMonthly inflation maintained a rising trend during Q3/2008, mainly in response toMonthly inflation maintained a rising trend during Q3/2008, mainly in response to
heavy domestic demand and the seasonal factor of religious festivities (Eid-ul-Fitr)heavy domestic demand and the seasonal factor of religious festivities (Eid-ul-Fitr)heavy domestic demand and the seasonal factor of religious festivities (Eid-ul-Fitr)heavy domestic demand and the seasonal factor of religious festivities (Eid-ul-Fitr)heavy domestic demand and the seasonal factor of religious festivities (Eid-ul-Fitr).
Measured annually, CPI inflation at end-Q3/2008 reached 12.14% (yoy), up from
11.03% (yoy) in the preceding quarter (Graph 3.1). In September 2008, monthly
inflation came to 0.97% (mtm). Analysed by expenditure category, inflation in Q3/
2008 was driven primarily by the foodstuffs category; housing, water, electricity,
gas and fuels; and the processed foods, beverages, cigarettes
and tobacco category (Graph 3.2).
The CPI inflation rate is explained by the non-fundamentals ofThe CPI inflation rate is explained by the non-fundamentals ofThe CPI inflation rate is explained by the non-fundamentals ofThe CPI inflation rate is explained by the non-fundamentals ofThe CPI inflation rate is explained by the non-fundamentals of
rising pressure in volatile foods and administered prices,rising pressure in volatile foods and administered prices,rising pressure in volatile foods and administered prices,rising pressure in volatile foods and administered prices,rising pressure in volatile foods and administered prices,11111 and and and and and
fundamental factor of core inflation made up of inflationfundamental factor of core inflation made up of inflationfundamental factor of core inflation made up of inflationfundamental factor of core inflation made up of inflationfundamental factor of core inflation made up of inflation
expectations, demand-side pressure and the output gap.expectations, demand-side pressure and the output gap.expectations, demand-side pressure and the output gap.expectations, demand-side pressure and the output gap.expectations, demand-side pressure and the output gap. Pressure
from volatile foods inflation was commensurate with the high
international food commodity prices and the seasonal trends
associated with the Ramadan fasting month and Eid-ul-Fitr
festivities. Administered prices inflation, which mounted due to
the ongoing shortages of energy commodities in some regions,Graph 3.1
CPI Inflation
%, mtm %, yoy
0
1
2
3
4
5
2006 2007 20081 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9
-3
2
7
12
17
22
MtM
YoY (RHS)
1 Aggregated inflation (core, volatile foods and administered prices) calculated by BankIndonesia based on sub-category approach.
Monetary Indicators and Policy, Q3/2008
15
also exacerbated Q3/2008 CPI inflation. At the same time,
inflationary pressure from fundamentals, as reflected in the trend
in core inflation, also remained high. The main factors influencing
core inflation were persistently high inflation expectations and
imported inflation and swelling aggregate demand.
Volatile foods inflation mounted higher in Q3/2008 in bothVolatile foods inflation mounted higher in Q3/2008 in bothVolatile foods inflation mounted higher in Q3/2008 in bothVolatile foods inflation mounted higher in Q3/2008 in bothVolatile foods inflation mounted higher in Q3/2008 in both
quarterly and annual figures.quarterly and annual figures.quarterly and annual figures.quarterly and annual figures.quarterly and annual figures. The surge in volatile foods inflation
is related to high international foodstuff prices and escalating
seasonal demand at the time of the fasting month and Eid-ul-
Fitr festivities. Commodities in this category that underwent
inflation in Q3/2008 included eggs and broiler chicken. In the
case of broiler chicken and eggs, prices increases resulted mainly
from increased international market prices for corn and soy beans,
used as raw material for domestic animal feeds. On the other
hand, prices for other volatile food items, such as cooking oil,
rice and seasonings, helped to mitigate the surge in inflationary pressure. The drop
in international CPO prices in line with the drastic fall in world crude oil prices to
below USD100 per barrel prompted manufacturers to hold back from raising
domestic cooking oil prices. Furthermore, despite the end of the harvest, rice prices
were relatively stable due to the maintenance of adequate rice buffer stocks by the
National Logistics Agency (Bulog) for market operations in the event of price increases
beyond reasonable limits. Positive developments were also evident in the seasonings
category (shallots, red chilli peppers and tomatoes), which underwent deflation as
a result of plentiful supply.
Monthly administered prices inflation showed an upward trend in Q3/2008, butMonthly administered prices inflation showed an upward trend in Q3/2008, butMonthly administered prices inflation showed an upward trend in Q3/2008, butMonthly administered prices inflation showed an upward trend in Q3/2008, butMonthly administered prices inflation showed an upward trend in Q3/2008, but
was lower in the quarterly measure compared to Q2/2008was lower in the quarterly measure compared to Q2/2008was lower in the quarterly measure compared to Q2/2008was lower in the quarterly measure compared to Q2/2008was lower in the quarterly measure compared to Q2/2008. The increased
administered prices inflation resulted largely from increases in bottled LPG and
kerosene prices, due to shortages. Teething troubles in the conversion programme
caused by shortages of LPG and kerosene supplied by Pertamina
were exploited by some parties to sell LPG and kerosene at
marked-up prices. Besides kerosene and LPG, prices mounted
for clove cigarettes and filter clove cigarettes, although the impact
was minimal. Despite the prevailing upward trend, the quarterly
measure of administered prices inflation (qtq) was well below
that of the earlier quarter, due to the absence of lingering impact
from the past fuel price hike.
Core inflation was again strong in Q3/2008.Core inflation was again strong in Q3/2008.Core inflation was again strong in Q3/2008.Core inflation was again strong in Q3/2008.Core inflation was again strong in Q3/2008. The most important
factors influencing core inflation during the quarter originated
from external pressures comprising heightened inflation in trading
partner countries (Graph 3.3) and high international foodstuff
prices. In a similar trend, public expectations generally remained
high during Q3/2008 (Graph 3.4). Expectations were not only
Graph 3.2
Inflation and Contribution to Inflation by Category,
Goods and Services Q3/2008 (q-t-q)
0 1 2 3 4 5 6
2.62
3.58
1.64
3.77
0.92
0.77
4.75
%
Share (m-t-m)Inflation (m-t-m)
Proccesed Food
Food, Beverages, Cigarattes& Tobacco
Housing, Electricity, Water,Gas, and Fuel
Clothing
Health
Education, Recreation& Sport
Transportation, Communication& Financial Service
Graph 3.3
Exchange Rate and Trade Partner Countries Inflation
Trade Partner Countries Inflation (RHS)
%,yoy
CPI (LHS)
%,yoy
12.14
0.45
3.89
-12
-7
-2
3
8
13
18
23
0
1
2
3
4
5
2004 2005 2006 2007 2008
1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9
Depreciation/Appreciation Rp/USD (LHS)
Monetary Policy Report - Quarter III-2008
16
Graph 3.6
Rupiah Exchange Rate Volatility
Graph 3.5
Rupiah Exchange Rate
2006 2007 2008
9385
9,216
9700
10000
9400
9100
8800
85002
Jan15Feb
31Mar
16May
29Jun
14Aug
27Sep
10Nov
26Dec
8Feb
26Mar
9May
22Jun
7Aug
20Sep
5Nov
19Dec
1Feb
18Mar
1May
16Jun
30Jul
12Sep
Daily Exchange rate Quarterly Average
Exchange Rate, Rp/USD Volatility, %
8,000
8,500
9,000
9,500
10,000
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
9385
1.51
1.420.61
1.11
2Jan
2006 2007 2008
13Feb
27Mar
8May
19Jun
31Jul
11Sep
23Oct
4Dec
15Jan
26Feb
9Apr
21May
2Jul
13Aug
24Sep
5Nov
17Dec
28Jan
10Mar
21Apr
2Jun
14Jul
25Aug
Daily Exchange RateVolatilityQuarterly Average Volatility
fuelled by external pressures, but also by the hike in domestic
fuel prices in the preceding quarter. Analysed by demand-supply
interaction, inflationary pressure from the output gap is
forecasted to be negative due to the continued supply-side
responsiveness to rising demand. Even so, the steadily rising
demand-side pressures call for continued vigilance.
Analysed by contribution, price increases in the categories of
processed foods, beverages, cigarettes and tobacco and
education, recreation and sports accounted for the strongest
rise in core inflation. This is to be expected with the pattern of
the Eid-ul-Fitr festive season, marked by soaring demand. On
the other hand, falling prices for gold jewellery as world gold
prices slipped to a low of USD779 per ounce helped keep core
inflation from climbing higher.
RUPIAH EXCHANGE RATE
Despite downward pressure at the end of the period under
review, the average value of the rupiah exchange rate appreciatedthe rupiah exchange rate appreciatedthe rupiah exchange rate appreciatedthe rupiah exchange rate appreciatedthe rupiah exchange rate appreciated
further during Q3/2008further during Q3/2008further during Q3/2008further during Q3/2008further during Q3/2008. Measured as an average, the rupiah
gained 0.47% in Q3/2008, climbing from Rp 9,259 in Q2/2008
to Rp 9,216 to the USD (Graph 3.5). Due to strong depreciating
pressure at the end of the quarter, the rupiah closed 1.76%
down from Rp 9,220 to the USD at end-Q2/2008 at the end-
Q3/2008 position of Rp 9,385 to the USD. During Q3/2008,
movement in the rupiah maintained a fluctuating trend due to
the escalation of pressure at the end of the period. Rupiah
volatility widened in Q3/2008 to 1.11% from 0.61% in the
preceding quarter (Graph 3.6).
The mounting risk of global economic slowdown, theThe mounting risk of global economic slowdown, theThe mounting risk of global economic slowdown, theThe mounting risk of global economic slowdown, theThe mounting risk of global economic slowdown, the
intensifying financial crisis in the US and perceptions of theintensifying financial crisis in the US and perceptions of theintensifying financial crisis in the US and perceptions of theintensifying financial crisis in the US and perceptions of theintensifying financial crisis in the US and perceptions of the
balance of payments outlook all affected movement in the rupiahbalance of payments outlook all affected movement in the rupiahbalance of payments outlook all affected movement in the rupiahbalance of payments outlook all affected movement in the rupiahbalance of payments outlook all affected movement in the rupiah
during Q3/2008during Q3/2008during Q3/2008during Q3/2008during Q3/2008. The global economic slowdown and the
strengthening of the dollar prompted a slide in international
commodity prices, which also affected Indonesia»s mainstay
export commodities. This has led to perceptions of deterioration
in the balance of payments outlook for Indonesia, with focus
on the current account. The US slide into financial crisis has also
triggered capital flight from emerging market assets prompted
by renewed risk aversion among foreign investors. These jitters
set off a round of capital reversal from assets in countries in the
region accompanied by downward pressure on regional
currencies. Despite the considerable pressure on the rupiah, on
Graph 3.4
Inflation Expectation - Consensus Forecast
%, yoy
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
10.5
11.0
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 92007 2008
2008 2009
Monetary Indicators and Policy, Q3/2008
17
the regional level the rupiah maintained relative stability in
comparison to other currency rates in the region. Conducive
factors in the domestic economy in tandem with the tight bias
monetary policy stance and Bank Indonesia»s stabilisation of the
forex market helped to fend off pressure for steeper depreciation
in the rupiah.
Risks have escalated in the wake of external developments nearRisks have escalated in the wake of external developments nearRisks have escalated in the wake of external developments nearRisks have escalated in the wake of external developments nearRisks have escalated in the wake of external developments near
the end of Q3/2008the end of Q3/2008the end of Q3/2008the end of Q3/2008the end of Q3/2008. The global repricing of risk brought on by
the weakening in the global economy and the financial crisis in
the US has dampened the risk appetite for emerging market
assets. Reflecting this is the widening in the yield spread between
Indonesia global bonds and US T-notes from 370 bps in Q2/
2008 to 411 bps at end Q3/2008 (Graph 3.7). Another risk
indicator pointing in a similar direction was the renewed increase
in the EMBIG (Emerging Market Bond Index Global) spread and
the persistently high level of the swap premium at the end of
the period under review (Graph 3.8).
The tight bias policy stance adopted by Bank Indonesia at a timeThe tight bias policy stance adopted by Bank Indonesia at a timeThe tight bias policy stance adopted by Bank Indonesia at a timeThe tight bias policy stance adopted by Bank Indonesia at a timeThe tight bias policy stance adopted by Bank Indonesia at a time
of declining interest rates in advanced economies has widenedof declining interest rates in advanced economies has widenedof declining interest rates in advanced economies has widenedof declining interest rates in advanced economies has widenedof declining interest rates in advanced economies has widened
the yield spread for the rupiah.the yield spread for the rupiah.the yield spread for the rupiah.the yield spread for the rupiah.the yield spread for the rupiah. This has become one incentive
for investing in rupiah-denominated assets. Yield on rupiah
investments, indicated by the interest rate differential and the
yield spread of government bonds (domestic currency) over US
T-Notes, widened further, placing Indonesia ahead of all other
countries in the region (Graph 3.9). Uncovered interest parity
widened from 6.38% at end-Q2/2008 to 7.05% in the quarter
under review, and was the highest among countries in the region.
With this yield adjusted for risk,2 the covered interest rate parity
came to 3.27% for the quarter, still ahead of the region. At the
same time, the other yield indicator, the yield spread between
Government Securities and US T-Notes, retained its edge in the
region.
The escalation in external risks linked to the spreading impact ofThe escalation in external risks linked to the spreading impact ofThe escalation in external risks linked to the spreading impact ofThe escalation in external risks linked to the spreading impact ofThe escalation in external risks linked to the spreading impact of
the global economic slowdown and uncertainty in the conditionthe global economic slowdown and uncertainty in the conditionthe global economic slowdown and uncertainty in the conditionthe global economic slowdown and uncertainty in the conditionthe global economic slowdown and uncertainty in the condition
of the US financial sector prompted foreign investors to pull theirof the US financial sector prompted foreign investors to pull theirof the US financial sector prompted foreign investors to pull theirof the US financial sector prompted foreign investors to pull theirof the US financial sector prompted foreign investors to pull their
money out of SBIs, even in spite of ongoing gains in Governmentmoney out of SBIs, even in spite of ongoing gains in Governmentmoney out of SBIs, even in spite of ongoing gains in Governmentmoney out of SBIs, even in spite of ongoing gains in Governmentmoney out of SBIs, even in spite of ongoing gains in Government
Securities and stocks. Securities and stocks. Securities and stocks. Securities and stocks. Securities and stocks. However, efforts to sustain foreigner
confidence in macro policy management and the high yields on
Government Securities encouraged inflows of capital into
Graph 3.7
Yield Spread between Global Bond RI and UST-Note
%
2007 2008
Yield Global Bond Indonesia
Yield UST-Note
514 bpsSpread
2.50
3.50
4.50
5.50
6.50
7.50
8.50
9.50
Mar Apr May Jun Jul Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jun Aug Sep
Graph 3.8
Swap Premium in Various Tenors
Source : Reuters (processed)
%
2007 2008
Jan Mar May Jul Sep NovFeb Apr Jun Aug Oct Dec Jan Mar May Jul SepFeb Apr Jun Aug-2.0
0.0
2.0
5.0
6.0
8.0
9.0
7.0
4.0
3.0
1.0
-1.0
6-Months Premium 12-Months Premium
1-Month Premium 3-Months Premium
2 In this regard, the risk indicator used is yield spread between Indonesian Government foreigncurrency bonds and US T-Notes.
Graph 3.9
Comparison of Yields Across Various Countries
2006 20082007
Indonesia Malaysia Philippines
Thailand Singapore
-4
-2
0
2
4
6
8
10
12
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep
8.982
0.923
3.778
0.795
-0.669
Monetary Policy Report - Quarter III-2008
18
Government Securities. Foreign ownership of Government
Securities mounted Rp 10.13 trillion (USD1.11 billion) to the end-
quarter position of Rp 104.23 trillion (USD11.15 billion), bringing
total foreign placements in SBIs and Government Securities to
Rp 124.6 trillion (USD13.33 billion). On the stock market, foreign
investors again recorded a net purchase in Q3/2008 at Rp 2.16
trillion (USD230.35 million). In the outcome of these
developments, Q3/2008 recorded a net outflow of foreign capital
at USD1.9 billion.
Domestic demand for foreign currencies was again dominatedDomestic demand for foreign currencies was again dominatedDomestic demand for foreign currencies was again dominatedDomestic demand for foreign currencies was again dominatedDomestic demand for foreign currencies was again dominated
by corporate demand. by corporate demand. by corporate demand. by corporate demand. by corporate demand. Rising imports led to increased foreign
currency demand from the corporate sector, led by SOEs (Graph
3.10). Average corporate forex demand during the quarter edged
upwards to about USD354 million per day from the preceding
quarter when daily demand averaged USD329 million.
MONETARY POLICY
Policy Strategy
During Q3/2008, Bank Indonesia raised the BI Rate by 75 bps to 9.25% at the endDuring Q3/2008, Bank Indonesia raised the BI Rate by 75 bps to 9.25% at the endDuring Q3/2008, Bank Indonesia raised the BI Rate by 75 bps to 9.25% at the endDuring Q3/2008, Bank Indonesia raised the BI Rate by 75 bps to 9.25% at the endDuring Q3/2008, Bank Indonesia raised the BI Rate by 75 bps to 9.25% at the end
of the quarterof the quarterof the quarterof the quarterof the quarter. These decisions were taken to safeguard the achievement of the
medium-term inflation target while monitoring a range of developments and taking
account of overall macroeconomic conditions and financial system stability. This
level of the BI Rate was subsequently reflected in rate movement on the overnight
interbank market.
In view of recent developments on the global financial market, Bank Indonesia
decided to lower the overnight Repo Rate from the former BI Rate plus 300 bps to
the BI Rate plus 100 bps and to raise the FASBI Rate from the BI Rate minus 200 bps
to the BI Rate minus 100 bps. This decision was taken to ensure adequate banking
liquidity while safeguarding monetary policy effectiveness in inflation control.
Accordingly, the overnight interest rate corridor will move symmetrically with the BI
rate at ± 100 bps. In addition, on 23 September 2008, Bank Indonesia decided to
extend the term of fine tune operations (FTO) from 1-14 days to 1 day-3 months.
The extension of the FTO tenor is intended to provide greater room for liquidity
management, which comprises part of the Open Market Operations (OMO)
conducted by Bank Indonesia. More flexible management of liquidity on the
interbank money market will improve the effectiveness of Bank Indonesia»s actions
to safeguard the proper functioning of the market. Accordingly, interest rate stability
and unimpeded liquidity flows will be maintained on the interbank money market
in the event of any heightened uncertainties, such as has happened on global
money markets in recent times.
During the third quarter, transmission of the BI Rate to the financial sector operated
through several channels. On the money marketOn the money marketOn the money marketOn the money marketOn the money market, rates for various tenors tracked
Graph 3.10
Forex Demand and Supply
Million USD IDR/USD
8600
8700
8800
8900
9000
9100
9200
9300
9400
9500
2007 2008
Excess Supply
Excess Demand
-1000
-5000
-3000
1000
3000
5000
Jun Aug OctAprFeb DecJan Mar May Jul Sep Nov Jun AugAprFebJan Mar May Jul Sep
Net S(+)/D(-) from domestic actors Net S(+)/D(-) from foreign actorsNet S(+)/D(-) Total foreign and domestic actors Exchange Rate (rhs)
Monetary Indicators and Policy, Q3/2008
19
movement in the BI Rate and forward perceptions. Alongside this, the BI Rate was
transmitted more strongly to bank deposit and lending rates. However, the increases
in the BI Rate were not transmitted into funding growth and credit expansion.
Growth in depositor funds continued to slide, while credit expansion gathered
momentum. On the stock marketOn the stock marketOn the stock marketOn the stock marketOn the stock market, IDX Index performance was heavily influenced
by the fallout from escalating global risks, resulting in 21.9% correction. On theOn theOn theOn theOn the
Government Securities marketGovernment Securities marketGovernment Securities marketGovernment Securities marketGovernment Securities market, the global turmoil drove up yields on short-term
tenors. During Q3/2008, yields on short-term Government Securities continued to
rise. However, on the mutual funds marketmutual funds marketmutual funds marketmutual funds marketmutual funds market, NAV faltered in keeping with the weaker
performance of underlying assets.
Concerning the exchange rate, Bank Indonesia steadily pursued a series of measuresConcerning the exchange rate, Bank Indonesia steadily pursued a series of measuresConcerning the exchange rate, Bank Indonesia steadily pursued a series of measuresConcerning the exchange rate, Bank Indonesia steadily pursued a series of measuresConcerning the exchange rate, Bank Indonesia steadily pursued a series of measures
to maintain stability in the rupiah.to maintain stability in the rupiah.to maintain stability in the rupiah.to maintain stability in the rupiah.to maintain stability in the rupiah. Key actions focused on implementation of prudent
monetary policy and consistent sterilisation of the exchange rate to prevent excessive
volatility by maintaining international reserves at a level commensurate to the
fundamental needs of the economy. Other actions in support of this policy included
a revamped communications strategy, improved effectiveness in prudential
regulations and continual monitoring of forex payments.
Interest Rates
In Q3/2008, the 75 bps increase in the BI Rate to 9.25% at end-September 2008In Q3/2008, the 75 bps increase in the BI Rate to 9.25% at end-September 2008In Q3/2008, the 75 bps increase in the BI Rate to 9.25% at end-September 2008In Q3/2008, the 75 bps increase in the BI Rate to 9.25% at end-September 2008In Q3/2008, the 75 bps increase in the BI Rate to 9.25% at end-September 2008
was reflected in stable movement in overnight money market rates at around thewas reflected in stable movement in overnight money market rates at around thewas reflected in stable movement in overnight money market rates at around thewas reflected in stable movement in overnight money market rates at around thewas reflected in stable movement in overnight money market rates at around the
level of the BI Ratelevel of the BI Ratelevel of the BI Ratelevel of the BI Ratelevel of the BI Rate. At the same time, the interbank rate for > 30 day tenors
reached 11.13%, consistent with the strong perceptions of tight bank liquidity and
spillover from global conditions. Under these conditions, Bank Indonesia responded
with more intensive actions in open market operations employing the FTO
instrument, adjustments in liquidity absorption in SBI auctions and adjustments to
the interest rate corridor.
The decisions to raise the BI Rate were followed by increases in bank time depositThe decisions to raise the BI Rate were followed by increases in bank time depositThe decisions to raise the BI Rate were followed by increases in bank time depositThe decisions to raise the BI Rate were followed by increases in bank time depositThe decisions to raise the BI Rate were followed by increases in bank time deposit
rates.rates.rates.rates.rates. In the first two months of Q3/2008, the hikes in the BI Rate were transmitted
mainly to increases in the weighted average 1-month and 3-month deposit rates
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug SepInterest rate (%)
BI Rate 8.25 8.25 8.25 8.25 8.25 8.00 8.00 8.00 8.0 8.00 8.25 8.50 8.75 9.00 9.25
1-month Dep. Guarantee 8.25 8.25 8.25 8.25 8.25 8.25 8.25 8.00 8.00 8.00 8.25 8.25 8.25 8.75 8.75
1-month Dep. (Weight Avg) 7.26 7.16 7.13 7.16 7.18 7.19 7.07 6.95 6.88 6.86 6.98 7.19 7.51 8.04 n.a
1-month Dep. (Counter Rate) 7.36 7.20 7.15 7.15 7.13 7.09 6.97 6.9 6.84 6.85 6.84 7.01 7.18 7.42 7.74
Base Lending Rate 13.62 13.42 13.31 13.21 13.13 13.12 13.14 12.92 12.83 12.75 12.77 12.80 12.95 13.21 13.26
Working Capital Credit 13.71 13.66 13.31 13.16 13.16 13.00 12.99 12.96 12.88 12.93 12.92 12.99 13.14 13.42 n.a
Investment Credit 13.82 13.75 13.45 13.28 13.19 13.01 12.81 12.71 12.59 12.47 12.36 12.51 12.61 12.86 n.a
Consumption Credit 16.68 16.7 16.47 16.33 16.39 16.13 16.04 15.96 15.83 15.74 15.67 15.71 15.73 15.78 n.a
Table 3.1
Interest Rate Movements
Quarter III-2007 Quarter IV-2007 Quarter I-2008 Quarter II-2008 Quarter III-2008
Monetary Policy Report - Quarter III-2008
20
Graph 3.11
Funding vs Credit
Credit Interest Rate and Deposits (%)(%, y-o-y)
6
9
12
15
18
21
24
27
30
33
6
8
10
12
14
16
18
Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug
2005 2006 2007 2008
Total Deposits
Total of Credit rDeposits (average)
rCredit (average)
(Table 3.1). In contrast to historical trends, these increases in short-term time deposit
rates surpassed that of the BI Rate. This points to vigorous efforts of banks to boost
their funding base to keep pace with the ongoing acceleration in credit expansion,
as evident in the steady rise in the LDR. These developments suggest a growing
strength in response to increases in the BI Rate since May 2008, led by foreign and
joint venture banks. Regional development banks, on the other hand, did not begin
adjusting their rates until July. Data on counter rates indicates that during September,
the upward movement in time deposit rates was sustained, extending across all
tenors.
The rise in the BI was also increasingly transmitted to loan interest rates.The rise in the BI was also increasingly transmitted to loan interest rates.The rise in the BI was also increasingly transmitted to loan interest rates.The rise in the BI was also increasingly transmitted to loan interest rates.The rise in the BI was also increasingly transmitted to loan interest rates. In the first
two months of Q3/2008, the hikes in the BI Rate were transmitted to the weighted
average for all lending rates. The largest increase was recorded in interest rates for
working capital credit, followed by investment credit and consumption credit.
Accordingly, transmission of increases in the BI Rate since May 2008 has taken
place mainly at foreign and joint venture banks, while regional development banks
were the slowest to respond to increases in the BI Rate.
Funds, Credit and the Money Supply
The BI Rate hikes have not influenced funding growthThe BI Rate hikes have not influenced funding growthThe BI Rate hikes have not influenced funding growthThe BI Rate hikes have not influenced funding growthThe BI Rate hikes have not influenced funding growth. As of the first two months
of Q3/2008, increases in the BI Rate were not reflected in growth of depositor
funds. In August 2008, depositor funds recorded 9.7% expansion (yoy), down
from the previous quarter»s level of 14.6% (yoy) (Graph 3.11). Contributing to this
delayed response was lag across almost all components except fixed deposits. The
slow response in demand deposits occurred for funds held by Government-related
institutions. At the same time, indications suggest that the lag in the growth response
in personal savings deposits is related to the increased attractiveness of time deposit
interest and the public need for cash transactions. Time deposits were up in August
for almost all depositors, led by individuals and private companies.
The increases in the BI Rate were in fact followed by acceleratedThe increases in the BI Rate were in fact followed by acceleratedThe increases in the BI Rate were in fact followed by acceleratedThe increases in the BI Rate were in fact followed by acceleratedThe increases in the BI Rate were in fact followed by accelerated
credit expansion.credit expansion.credit expansion.credit expansion.credit expansion. The credit market continued to feel the effect
of the monetary policy lag, as evident in the 32.5% (yoy) annual
rate of credit expansion recorded in August 2008, up slightly
from the previous month»s rate of 32.3% (yoy) (Graph 3.11).
Analysed by purpose of use, the leading component in the annual
credit expansion was again working capital credit, followed by
consumption and investment credit. Analysed by debtor, credit
expansion was driven primarily by private companies and
Government-related institutions.
Economic liquidity grew at a slower pace, dipping below theEconomic liquidity grew at a slower pace, dipping below theEconomic liquidity grew at a slower pace, dipping below theEconomic liquidity grew at a slower pace, dipping below theEconomic liquidity grew at a slower pace, dipping below the
historical level.historical level.historical level.historical level.historical level. In August 2008, M1 and M2 registered 12.5%
(yoy) and 12.6% (yoy) growth, down slightly from 22.4% (yoy)
and 17.1% (yoy) in the preceding quarter. Accordingly, average
Monetary Indicators and Policy, Q3/2008
21
M1 and M2 growth reached 13.9% (yoy) and 13.3% (yoy), also
slower than one quarter earlier. In real terms,3 M1 and M2 growth
in August 2008 came to 0.7% (yoy) and 0.8% (yoy), having
narrowed due to the effect of rising inflation (Graph 3.12). As a
result, economic liquidity measured in nominal and real terms
recorded expansion at below historical average for the past 7
years (2000-2006), with the exception of nominal M2.
Financial Markets
Stock market performance in Q3/2008 was again overshadowedStock market performance in Q3/2008 was again overshadowedStock market performance in Q3/2008 was again overshadowedStock market performance in Q3/2008 was again overshadowedStock market performance in Q3/2008 was again overshadowed
by global risks.by global risks.by global risks.by global risks.by global risks. Liquidity injections by the US authorities produced
only temporary respite on global stock markets and did not
completely dispel worries among global market actors of further
financial market turmoil. This in combination with weak domestic
sentiment plunged the IDX Composite to 1,832 at end-Q3/2008,
down 21.9% from the Q2/2008 position (Graph 3.13).
The IDX Composite was also confronted with domestic risksThe IDX Composite was also confronted with domestic risksThe IDX Composite was also confronted with domestic risksThe IDX Composite was also confronted with domestic risksThe IDX Composite was also confronted with domestic risks.
These included an escalation in the risks to the IDX Composite
from commodity price movements, among others due to the
large capitalisation of mining and agribusiness stocks and the
linkages to non-mining and agribusiness sectors exposed to
commodity price risks. In addition, commodity-based stocks were
also most actively traded with a tendency towards large-scale
speculation. On the other hand, movement in the IDX Composite
that at times ran counter to global markets suggested hit and
run behaviour by foreign market players.
The stock market downturn was in fact exploited by foreigners,The stock market downturn was in fact exploited by foreigners,The stock market downturn was in fact exploited by foreigners,The stock market downturn was in fact exploited by foreigners,The stock market downturn was in fact exploited by foreigners,
who bought up cheap stocks.who bought up cheap stocks.who bought up cheap stocks.who bought up cheap stocks.who bought up cheap stocks. Foreign investors continued with
their selective buying of IDX shares, albeit at reduced intensity.
The net foreign purchase reached Rp 2.2 trillion in Q3/2008,
down from the Q2/2008 net purchase recorded at Rp 4.8 trillion
(Graph 3.14). This decline was commensurate with the fall from
Rp 5.7 trillion share trading in Q2/2008 to Rp 3.8 trillion in Q3/
2008. Conditions in Q3/2008 were also marked by a shift in
foreign-held portfolios to financial sector stocks, which
underwent more modest correction. This condition was closely
linked to the increased risk of commodity-based shares.
On the Government Securities market, the upswing in July 2008On the Government Securities market, the upswing in July 2008On the Government Securities market, the upswing in July 2008On the Government Securities market, the upswing in July 2008On the Government Securities market, the upswing in July 2008
was again followed by downward pressure in August 2008was again followed by downward pressure in August 2008was again followed by downward pressure in August 2008was again followed by downward pressure in August 2008was again followed by downward pressure in August 2008 in
response to heightened domestic and external risks. On the
Graph 3.12
Real Growth in M1 and M2
%, y-o-y
(12)
(9)
(6)
(3)
0
3
69
12
15
18
21
24
27
30
2000 2001 2002 2003 2004 2005 2006 2007 2008
1 3 5 7 9 1 1 3 5 7 9 1 1 3 5 7 9 1 1 3 5 7 9 1 1 3 5 7 9 1 1 3 5 7 9 1 1 3 5 7 9 1 1 3 5 7 9 1 1 3 5 7
M1 Real
Currency Real
M2 Real
3 Calculated against current inflation.
Graph 3.13
IDX Composite
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800
3,000
2006 2007 2008
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep
Graph 3.14
Net Foreign Buying
Aug 08-Sept 08 (-19.87%), Dec 07-Aug 08 (-21.12%)
1,500
1,700
1,900
2,100
2,300
2,500
2,700
2,900
(1,000)
(500)
-
500
1,000
1,500
2,000
2,500
3,000
Dec Jan Jan Feb Feb Mar Mar Apr Apr May May Jun Jun Jun Jul Jul Aug Aug Sep
2007 2008
Foreign Net Buying (Billion Rp)IDX Composite
Monetary Policy Report - Quarter III-2008
22
Graph 3.15
Trading Activity in Government Securities
Vol (Rp t) Frequency
2005 2006 2007 2008
Avg FrequencyAvg Vol
0.0
2.0
4.0
6.0
8.0
10.0
0
100
200
300
400
500
Jan Mar May Jul Sep Nov Jan MarMay Jul Sep Nov Jan MarMay Jul Sep Nov Jan Mar May Jul Sep
domestic market, increased yields on Government Securities at
end-Q3/2008 were driven by perceptions of tightening bank
liquidity, adjustment on yields to inflation and substantial added
supply of domestic Government Securities. At the same time,
on the externals side, the increased global risks triggered a flight
to quality, with investors shunning emerging markets. As a result,
the monthly average yield on Government Securities rebounded
with an increase of 87 bps, even through still below the end-Q2/
2008 position. At the same time, the quarterly average yield on
Government Securities for Q3/2008 narrowed further by 27 bps.
In view of global market conditions, global market actors are
exercising greater caution in their trading activities, as reflected
in the decline in daily average trading of Government Securities
(Graph 3.15).
Despite the lack of improvement in Government Securities performance, foreignDespite the lack of improvement in Government Securities performance, foreignDespite the lack of improvement in Government Securities performance, foreignDespite the lack of improvement in Government Securities performance, foreignDespite the lack of improvement in Government Securities performance, foreign
investor confidence in these instruments remained strong.investor confidence in these instruments remained strong.investor confidence in these instruments remained strong.investor confidence in these instruments remained strong.investor confidence in these instruments remained strong. Underpinning this
confidence was the subdued condition of various factors, including the reduced
fiscal risk associated with the steadier movement in fuel prices compared to 2005,
as to be expected with the downward trend in oil prices. Added to this, the sustained
high yields on Government Securities provided incentive for increased foreign buying.
In the outcome, foreigners booked a net purchase at Rp 6.29 trillion, mainly in
long-term Government Securities.
Mutual funds NAV has sustained correction.Mutual funds NAV has sustained correction.Mutual funds NAV has sustained correction.Mutual funds NAV has sustained correction.Mutual funds NAV has sustained correction. This is the result of deteriorating
performance in the underlying assets, i.e. stocks and Government Securities, in
addition to net redemptions from fixed income funds, mixed funds, money market
funds, index funds and fixed income ETFs. Despite this, the impact of the turbulence
on global and domestic financial markets was still minimal in comparison to the
NAV losses in 2005. Shoring up NAV performance was the expanding role of
institutional investors (pension funds and insurance companies) in mutual funds
with a long-term horizon and diversified products, keeping conditions on the mutual
funds market relatively subdued in comparison to 2005.
Outlook for the Indonesian Economy
23
4. Outlook for the IndonesianEconomy
In 2008, the Indonesian economy is forecasted to chart brisk growth in the rangeIn 2008, the Indonesian economy is forecasted to chart brisk growth in the rangeIn 2008, the Indonesian economy is forecasted to chart brisk growth in the rangeIn 2008, the Indonesian economy is forecasted to chart brisk growth in the rangeIn 2008, the Indonesian economy is forecasted to chart brisk growth in the range
of 6.2%-6.4%. of 6.2%-6.4%. of 6.2%-6.4%. of 6.2%-6.4%. of 6.2%-6.4%. The main driving factors will be exports - which recorded healthy
performance in the first half of the year on the strength of rising commodity
prices and sustained high growth in emerging market countries - and buoyant
household consumption. The fuel price hike has not impacted private consumption
to the extent originally forecasted. Investment growth is expected to improve
further, driven by non-construction investment in keeping with vigorous growth
in private consumption and exports. On the supply side, the trade, hotels and
restaurants sector and the transport and communications sector are predicted to
grow ahead of earlier growth forecasts as private consumption gathers
momentum. In 2009, the outlook for Indonesian economy is reduced growth.In 2009, the outlook for Indonesian economy is reduced growth.In 2009, the outlook for Indonesian economy is reduced growth.In 2009, the outlook for Indonesian economy is reduced growth.In 2009, the outlook for Indonesian economy is reduced growth.
Slowing growth will result mainly from slipping performance in exports of goods
and services, due to adverse external conditions. Despite this, domestic demand
will remain strong. Private consumption is forecasted to surge ahead of 2008,
buoyed by the activities for the national elections, lower inflation and government
measures to cut income taxes. Analysed by sector, economic growth is predicted
to be driven again by performance in the trade, hotels and restaurants sector,
manufacturing and the transport and communications sector. Economic growth
could potentially reach the lower limit of the projected range if economic
conditions in the US tumble in excess of forecasts.
Concerning prices, inflation in 2008 is forecasted to reach 11.5%-12.5% (y-o-y)inflation in 2008 is forecasted to reach 11.5%-12.5% (y-o-y)inflation in 2008 is forecasted to reach 11.5%-12.5% (y-o-y)inflation in 2008 is forecasted to reach 11.5%-12.5% (y-o-y)inflation in 2008 is forecasted to reach 11.5%-12.5% (y-o-y),
spurred by core inflation and administered prices. Inflationary pressure is predicted
to ease in Q4/2008. Key to this will be high levels of rice procurement by the
National Logistics Agency (Bulog) expected to bring volatile foods inflation to
below the historical average. To subdue inflation, Bank Indonesia will take further
actions to optimise the use of all monetary instruments at its disposal. In 2009,In 2009,In 2009,In 2009,In 2009,
CPI inflation is predicted to drop to the 6.5%-6.7% (y-o-y) rangeCPI inflation is predicted to drop to the 6.5%-6.7% (y-o-y) rangeCPI inflation is predicted to drop to the 6.5%-6.7% (y-o-y) rangeCPI inflation is predicted to drop to the 6.5%-6.7% (y-o-y) rangeCPI inflation is predicted to drop to the 6.5%-6.7% (y-o-y) range, again mainly
on account of core inflation and administered prices. The lower inflation is
predicted in response to monetary policy operations and reduced imported
inflation. Falling inflationary pressure is also related to Government policies
predicted to emphasise maintenance of stable prices around election time. Only
minimum inflationary pressure is expected from volatile foods while inflationary
pressure from administered prices will remain strong due to the effects of the
kerosene to bottled LPG conversion programme. Regarding core inflation, the
considerable demand-side inflationary pressures that have reared their head in
2008 are forecasted to carry over into 2009.
Monetary Policy Report - Quarter III-2008
24
ASSUMPTIONS AND SCENARIOS
International Economic Conditions
World economic growth is predicted to slump in figures for 2008 overall.World economic growth is predicted to slump in figures for 2008 overall.World economic growth is predicted to slump in figures for 2008 overall.World economic growth is predicted to slump in figures for 2008 overall.World economic growth is predicted to slump in figures for 2008 overall. The
weakening performance in the world economy is largely the result of turmoil on
global financial markets. The main factor responsible is the subprime mortgage
crisis in the United States that has led to spiralling losses and bankrupted financial
institutions and banks across the globe and subsequently unfolded into a liquidity
crisis on most interbank markets worldwide. The liquidity crunch on financial markets
has dealt even further blows with a general tightening of lending criteria. As a
result, credit lines have tightened up for banks, which has put added pressure on
household purchasing power. Household consumption has come under increasing
pressure from the impact of falling selling prices for household assets. In response
to slowing household demand, industry has cut back production and employment.
The gloomy prospects for advanced economies are reflected in the ongoing
deteriorating trend in consumer and business confidence surveys. Overall world
economic growth in 2008 is forecasted at 3.9% (Table 4.1). However, because of
the substantial impact of the financial market crisis in Q3/2008, the world GDP
forecast for 2008 is biased downwards.
In other areas, the slowing growth in the world economy has prompted a slide inIn other areas, the slowing growth in the world economy has prompted a slide inIn other areas, the slowing growth in the world economy has prompted a slide inIn other areas, the slowing growth in the world economy has prompted a slide inIn other areas, the slowing growth in the world economy has prompted a slide in
world commodity prices - including non-fossil fuel products as well as oil and naturalworld commodity prices - including non-fossil fuel products as well as oil and naturalworld commodity prices - including non-fossil fuel products as well as oil and naturalworld commodity prices - including non-fossil fuel products as well as oil and naturalworld commodity prices - including non-fossil fuel products as well as oil and natural
gasgasgasgasgas. During January-August 2008, non-fossil fuel commodity prices climbed 51.3%
(y-o-y). However, the latest monthly figures point to the onset of a downward trend.
Prices for non-fossil fuel commodities are predicted to show overall increases for
2008 in the range of 15% (y-o-y). Similarly, world oil prices are forecasted to decline.
This development is influenced by various factors
including fundamentals and non-fundamentals. The
fundamentals driving down oil prices stem from falling
world oil demand, particularly from advanced nations
and China, as domestic economies shed growth, in
addition to slower consumption in Asian economies
in the wake of the increases in fuel pump prices in
those countries. Added to this, non-fundamentals
ranging from dollar appreciation to climatic factors
such as the Ike and Gustav storms did not in fact have
major impact on US oil refining capacity. This,
alongside the easing of geopolitical tensions, has put
downward pressure on oil prices.
Fiscal Policy Scenario
Consistent with historical trends, Government
financial operations are expected to peak during in
the last quarter of 2008. Accordingly, growth in
Government consumption and investment is also
World GDPWorld GDPWorld GDPWorld GDPWorld GDP 5.15.15.15.15.1 5.05.05.05.05.0 3.93.93.93.93.9 3.03.03.03.03.0
DevelopedDevelopedDevelopedDevelopedDeveloped 3.03.03.03.03.0 2.62.62.62.62.6 1.51.51.51.51.5 0.50.50.50.50.5
US 2.8 2.0 1.6 0.1
Europe 2.8 2.6 1.3 0.2
Japan 2.4 2.1 0.7 0.5
Others Dev. 4.5 4.7 3.1 2.5
DevelopingDevelopingDevelopingDevelopingDeveloping 7.97.97.97.97.9 8.08.08.08.08.0 6.96.96.96.96.9 6.16.16.16.16.1
Africa 6.1 6.3 5.9 6.0
East and Central Europe 6.7 5.7 4.5 3.4
Commonwealth Nations 8.2 8.6 7.2 5.7
Asian Developing 9.9 10.0 8.4 7.7
China 11.6 11.9 9.7 9.3
India 9.8 9.3 7.9 6.9
Middle 5.7 5.9 6.4 5.9
Latin 5.5 5.6 4.6 3.2
Table 4.1
World GDP Projection
Sources: IMF, WEO October 2008
2006Projection
20072008 2009
Outlook for the Indonesian Economy
25
forecasted to reach a high during this period. The overall deficit for the year is
forecasted at 1.7% of GDP, below the Revised 2008 Budget deficit set at 2.1% of
GDP. The reduction in the deficit projection is explained mainly by the effect of
lower oil prices on the 2008 Budget assumptions and realised tax revenues forecasted
to exceed target. Given this deficit, indications suggest that the fiscal impulse for
2008 will again have an expansionary effect on economic growth, supported by
the secure outlook for fiscal sustainability.
On the financing side, the deficit reduction will lower the need for raising debt through
issues of Government/Sharia Government Securities. The planned issues of Sharia
Government Securities are expected to support this target, due to the less than
favourable conditions still prevailing on the domestic market for Government Securities.
In 2009, the budget deficit is forecasted to reach only 1.4% of GDP, below the
Government planned level of 1.7% of GDP. The reduced deficit is explained by lower
forecasted oil prices in comparison to Government assumptions and the tendency
for absorption of some central government expenditures to fall short of target.
ECONOMIC GROWTH OUTLOOK
In 2008, the Indonesian economy is predicted to grow at about 6.2%-6.4%In 2008, the Indonesian economy is predicted to grow at about 6.2%-6.4%In 2008, the Indonesian economy is predicted to grow at about 6.2%-6.4%In 2008, the Indonesian economy is predicted to grow at about 6.2%-6.4%In 2008, the Indonesian economy is predicted to grow at about 6.2%-6.4%. The
current economic growth is bolstered by exports - due to significant growth during
the first half of 2008 - forecasted to deliver a contribution surpassing private
consumption and investment. Exports in January-June 2008 were boosted by
spiralling prices for non-fossil fuel commodities and vigorous economic growth in
the developing world. Private consumption is also expected to chart higher growth
with the impact of the fuel price hike on private consumption less than originally
expected. In addition, the series of election processes that commenced in mid-
2008 will also have multiplier effects on private consumption, which is set to climb
in the final quarter of 2008.
In 2009, economic growth is predicted lower than in 2008In 2009, economic growth is predicted lower than in 2008In 2009, economic growth is predicted lower than in 2008In 2009, economic growth is predicted lower than in 2008In 2009, economic growth is predicted lower than in 2008, a result of less vigorous
export growth brought on by weaker prices for non-fossil fuel commodities and
falling demand due to the slowdown in world economic growth. On the domestic
side, private consumption will again serve as the engine of growth due to the
growing purchasing power of the public and continued multiplier effects from
election activities. Other factors auguring for positive impact on private consumption
are the widening of the tax-free income band, reductions in tax rates for MSMEs,
personal and corporate taxpayers and taxes on dividends and salary increases for
civil servants, police and military. The strength of private consumption will encourage
further vigorous investment growth in 2009, albeit down slightly from 2008 due to
slowing growth in exports.
Outlook for Aggregate Demand
Household consumption in 2008 is forecasted to expand at the rate of 5.3%-Household consumption in 2008 is forecasted to expand at the rate of 5.3%-Household consumption in 2008 is forecasted to expand at the rate of 5.3%-Household consumption in 2008 is forecasted to expand at the rate of 5.3%-Household consumption in 2008 is forecasted to expand at the rate of 5.3%-
5.5%5.5%5.5%5.5%5.5%, up from growth in 2007. This accelerated growth in private consumption is
Monetary Policy Report - Quarter III-2008
26
driven by a number of factors. First, the faster than expected growth in exports of
goods and services will produce a stronger income effect on private consumption.
Second, relatively low interest rates will encourage faster expansion in consumer
lending. Third, the May 2008 fuel price hike has not had the impact on private
consumption growth as originally expected. The effect of the higher fuel prices
announced in May 2008 on private consumption is different from that of the hike
in October 2005 (see Monetary Policy Review, Q2/2008).
The continued strength of private consumption is borne out in several indicators.
During Q3/2008, consumer lending maintained an upward trend. In August 2008,
consumption credit recorded 35% expansion. Another indicator was car sales with
growth at 49% (y-o-y) in July-August 2008.
Government consumption is forecasted to chart 5.9%-6.1% growth in 2008Government consumption is forecasted to chart 5.9%-6.1% growth in 2008Government consumption is forecasted to chart 5.9%-6.1% growth in 2008Government consumption is forecasted to chart 5.9%-6.1% growth in 2008Government consumption is forecasted to chart 5.9%-6.1% growth in 2008. This
is a more modest rate of growth compared to the earlier forecast published in the
Q2/2008 edition of the Monetary Policy Review. The low rate of Government
consumption is the result of a drop in central government consumption related to
the larger than expected spending on direct cash transfers. Added to this is
tightened regional government consumption as a result of the capping of the
assumed oil price used for calculating Profit Sharing Funds transferred to regional
governments.
Forecasted investment growth in 2008 is 12.9%-13.1%Forecasted investment growth in 2008 is 12.9%-13.1%Forecasted investment growth in 2008 is 12.9%-13.1%Forecasted investment growth in 2008 is 12.9%-13.1%Forecasted investment growth in 2008 is 12.9%-13.1%, up from 2007 and also
from earlier projections. Disaggregated by investor category, this growth will be
driven by private investment. In analysis by category of business, investment
performance will ride on the strength of non-construction investment. Robust growth
in private consumption will stimulate growth in non-construction investment.
Confirming this are several indicators pointing to brisk investment growth trend.
The high rate of FDI and domestic investment approvals and significant growth in
capital goods imports offer indications of future investment prospects. Another
indicator of the investment outlook is investment credit expansion, recorded in
August 2008 at 30%.
%Y-o-Y, Base Year 2000
2006
I II III IV I II III IV I II III*I t e m
Table 4.2
Economic Growth Projections √ Demand Side
20062007
* Bank Indonesia Projection figures
Total Consumption 3.8 5.6 2.8 3.5 3.9 4.6 4.6 5.3 5.1 4.9 5.6 4.9 5.0 5.3 - 5.5
Private Consumption 2.9 3.0 3.0 3.8 3.2 4.7 4.7 5.1 5.6 5.0 5.7 5.3 5.1 5.2 - 5.4
Government Consumption 11.5 28.8 1.7 2.2 9.6 3.7 3.8 6.5 2.0 3.9 4.7 2.2 4.5 5.9 - 6.1
Total Investment 1.4 0.9 0.8 6.8 2.5 7.0 6.9 10.4 12.1 9.2 15.4 12.8 12.0 12.9 - 13.1
Domestic Demand 3.2 4.4 2.3 4.3 3.5 5.2 5.2 6.6 6.8 6.0 8.0 6.9 6.8 7.2 - 7.4
Export of Goods and Services 11.8 11.4 8.3 6.6 9.4 8.1 9.8 6.9 7.3 8.0 15.5 16.1 15.8 14.3 - 14.5
Import of Goods and Services 4.8 9.3 10.9 9.2 8.6 8.5 6.5 7.0 13.6 8.9 17.8 16.7 16.0 16.4 - 16.6
PDBPDBPDBPDBPDB 5.15.15.15.15.1 5.05.05.05.05.0 5.95.95.95.95.9 6.06.06.06.06.0 5.55.55.55.55.5 6.16.16.16.16.1 6.46.46.46.46.4 6.56.56.56.56.5 6.36.36.36.36.3 6.36.36.36.36.3 6.36.36.36.36.3 6.46.46.46.46.4 6.36.36.36.36.3 6.2 - 6.46.2 - 6.46.2 - 6.46.2 - 6.46.2 - 6.4
20072008
2008*
Outlook for the Indonesian Economy
27
Concerning external performance, exports of goods and services are forecasted toexports of goods and services are forecasted toexports of goods and services are forecasted toexports of goods and services are forecasted toexports of goods and services are forecasted to
climb 14.3%-14.5% in 2008climb 14.3%-14.5% in 2008climb 14.3%-14.5% in 2008climb 14.3%-14.5% in 2008climb 14.3%-14.5% in 2008, up from 2007. Key to this strong showing in exports
are the high international commodity prices in the first half of 2008 and the ongoing
diversification of Indonesia»s export destinations in favour of developing nations,
particularly in Asia. Buoyant growth in commodity exports will be underpinned by
primary commodities. Assurance of continued supply of these export goods is
provided by the high rate of investment in the primary sector. At the same time,
imports of goods and services in 2008 are forecasted to expand by 16.4%-16.6%imports of goods and services in 2008 are forecasted to expand by 16.4%-16.6%imports of goods and services in 2008 are forecasted to expand by 16.4%-16.6%imports of goods and services in 2008 are forecasted to expand by 16.4%-16.6%imports of goods and services in 2008 are forecasted to expand by 16.4%-16.6%,
up from 2007 and earlier predictions. Key to this import growth is more vigorous
expansion in domestic demand and exports.
Outlook for Aggregate Supply
Analysed by sector, growth in 2008 will again be driven by the three leading sectorsAnalysed by sector, growth in 2008 will again be driven by the three leading sectorsAnalysed by sector, growth in 2008 will again be driven by the three leading sectorsAnalysed by sector, growth in 2008 will again be driven by the three leading sectorsAnalysed by sector, growth in 2008 will again be driven by the three leading sectors
of transport and communications, trade, hotels and restaurants and manufacturing.of transport and communications, trade, hotels and restaurants and manufacturing.of transport and communications, trade, hotels and restaurants and manufacturing.of transport and communications, trade, hotels and restaurants and manufacturing.of transport and communications, trade, hotels and restaurants and manufacturing.
The transport and communications sector still has room for strong growth. The
vigorous expansion in this sector will be contributed mainly by the communications
subsector. Technological advances in the communications subsector have made
communications services more affordable for the general public. Given the relatively
buoyant levels of private consumption, the market has considerable capacity to
absorb growth in the communications subsector. In similar developments,
performance in the trade, hotels and restaurants sector and in manufacturing will
be bolstered by public purchasing power, forecasted to remain strong. In 2009,
further improvement in public purchasing power will spur growth in manufacturing
and the trade, hotels and restaurants sector. However, a steeper than predicted
downturn in the US economy may cause economic growth to drop below the
projected range.
Manufacturing, the sector representing the largest share of the economy, isManufacturing, the sector representing the largest share of the economy, isManufacturing, the sector representing the largest share of the economy, isManufacturing, the sector representing the largest share of the economy, isManufacturing, the sector representing the largest share of the economy, is
forecasted to grow 4.0%-4.2% in 2008.forecasted to grow 4.0%-4.2% in 2008.forecasted to grow 4.0%-4.2% in 2008.forecasted to grow 4.0%-4.2% in 2008.forecasted to grow 4.0%-4.2% in 2008. Major contributions to non-fossil fuel
% Y-o-Y, Tahun Dasar 2000
2006
I II III IV I II III IV I II III*S e c t o r
Tabel 4.3
Economic Growth Projections - Supply Side
20062007
* Bank Indonesia Projection figures
Agriculture 6.6 1.6 2.6 2.6 3.4 -1.7 4.7 7.6 3.1 3.5 6.1 4.6 2.1 3.7 - 3.9
Mining & Quarrying 2.3 3.6 1.1 0.0 1.7 6.2 3.2 1.0 -2.1 2.0 -1.9 -0.9 1.0 (-0.2) - (-0.4)
Manufacturing 3.0 3.6 5.9 5.8 4.6 5.2 5.1 4.5 3.8 4.7 4.2 4.1 4.0 4.0 - 4.2
Electricity, Gas & Water Supply 5.1 4.5 5.8 7.7 5.8 8.2 10.2 11.3 11.8 10.4 12.6 11.2 11.0 11.1 - 11.3
Construction 7.7 8.5 8.5 8.6 8.3 8.4 7.7 8.3 9.9 8.6 7.9 8.0 8.1 7.9 - 8.1
Trade, Hotels & Restaurants 4.9 5.9 7.9 7.0 6.4 9.2 7.6 7.9 9.1 8.5 7.1 7.9 7.8 7.5 - 7.7
Transportation & Communication 12.0 13.8 14.5 17.0 14.4 13.0 12.7 14.1 17.4 14.4 20.3 19.6 19.5 19.3 - 19.5
Financial, Rental & Business Services 5.6 5.2 4.5 6.5 5.5 8.1 7.6 7.6 8.6 8.0 8.2 8.7 8.5 8.0 - 8.2
Services 5.8 6.0 6.7 6.2 6.2 7.0 7.0 5.2 7.2 6.6 5.6 6.5 7.3 6.3 - 6.5
GDPGDPGDPGDPGDP 5.15.15.15.15.1 5.05.05.05.05.0 5.95.95.95.95.9 6.06.06.06.06.0 5.55.55.55.55.5 6.16.16.16.16.1 6.46.46.46.46.4 6.56.56.56.56.5 6.36.36.36.36.3 6.36.36.36.36.3 6.36.36.36.36.3 6.46.46.46.46.4 6.36.36.36.36.3 6.2 - 6.46.2 - 6.46.2 - 6.46.2 - 6.46.2 - 6.4
20072008
2008*
Monetary Policy Report - Quarter III-2008
28
industry growth will come from the transportation equipment, machinery and
machine tools subsector and the food and beverages subsector. The growing market
for the shipbuilding industry and brisk demand in the automotive and related
industries and in manufacturing of heavy equipment, such as tractors, are factors
contributing to increased production in the transportation equipment, machinery
and machine tools subsector. Activities in preparation for the national elections are
expected to boost activity in the food and beverages industry, paper and printed
goods and the textiles, leather goods and footwear subsectors. Confirmation of
increased growth in the food and beverages subsector also comes from the upward
trend in raw material imports for this industry.
Growth in the trade, hotels and restaurants sector is predicted at about 7.6%-Growth in the trade, hotels and restaurants sector is predicted at about 7.6%-Growth in the trade, hotels and restaurants sector is predicted at about 7.6%-Growth in the trade, hotels and restaurants sector is predicted at about 7.6%-Growth in the trade, hotels and restaurants sector is predicted at about 7.6%-
7.8% in 20087.8% in 20087.8% in 20087.8% in 20087.8% in 2008. Strengthened public purchasing power has provided positive
momentum for performance in goods manufacturing sectors. This in turn will
generate increased activity in wholesale and retail trading. Also bolstering turnover
will be the onset of election-related activities. The general upswing in business
activity will also generate added value in the hotels and restaurants subsector.
Agriculture sector growth in 2008 is forecasted at about 3.7%-3.9%Agriculture sector growth in 2008 is forecasted at about 3.7%-3.9%Agriculture sector growth in 2008 is forecasted at about 3.7%-3.9%Agriculture sector growth in 2008 is forecasted at about 3.7%-3.9%Agriculture sector growth in 2008 is forecasted at about 3.7%-3.9%. In the
agriculture sector, the food crops subsector - led by rice cultivation - plays a major
role. Second Forecast figures by the Central Statistics Agency (BPS) point to
increases in production, harvested area and productivity. The government policy
for food self-sufficiency in 2009 is an important factor driving growth in the food
crops subsector. To realise this policy, the Government plans significant funding
increases for fertiliser and seed subsidies. The forecast for the estates subsector is
continued high production, driven mainly by output from oil palm estates. At this
time, most oil palm plantings have reached optimum maturity for production.
Although international CPO prices have begun to ease in line with crude oil prices,
increased quantity of production is expected to shore up performance in the
estates subsector.
The transport and communications sectorThe transport and communications sectorThe transport and communications sectorThe transport and communications sectorThe transport and communications sector is set for another year of high growth inis set for another year of high growth inis set for another year of high growth inis set for another year of high growth inis set for another year of high growth in
19.3%-19.5% in 200819.3%-19.5% in 200819.3%-19.5% in 200819.3%-19.5% in 200819.3%-19.5% in 2008. Transport and communications is one of the highest growth
sectors, propelled mainly by the performance of the communications subsector,
buoyed by adequate purchasing power coupled with more extensive coverage of
lower cost cellular telephone services. Although growth remains strong, the growth
trend in the transport and communications sector could potentially see some
slowing. This is expected from the escalating competition in the cellular telephone
industry in line with the growing number of operators in this sector. As more
companies join the fray, margins earned by individual cellular operators will decline
over time.
The construction sector is forecasted to chart reduced growth in 2008 at 7.9%-The construction sector is forecasted to chart reduced growth in 2008 at 7.9%-The construction sector is forecasted to chart reduced growth in 2008 at 7.9%-The construction sector is forecasted to chart reduced growth in 2008 at 7.9%-The construction sector is forecasted to chart reduced growth in 2008 at 7.9%-
8.1%.8.1%.8.1%.8.1%.8.1%. This downturn is explained primarily by the lack of significant progress in
infrastructure construction. Work on various infrastructure projects is expected to
slow down due to unexpectedly steep increases in construction material prices.
Outlook for the Indonesian Economy
29
Soaring prices of construction materials have eaten into contractor profit margins
and many are running losses. In toll road construction, the most important obstacle
involves the long-drawn out process of land expropriation.
In 2008, the financial sector is predicted to grow at 8.0%-8.2%.In 2008, the financial sector is predicted to grow at 8.0%-8.2%.In 2008, the financial sector is predicted to grow at 8.0%-8.2%.In 2008, the financial sector is predicted to grow at 8.0%-8.2%.In 2008, the financial sector is predicted to grow at 8.0%-8.2%. At this time,
banks face a liquidity crunch. To attract more depositor funds, banks are competing
with each other to raise their deposit rates, a move that will narrow the interest
rate spread. Under conditions of tight liquidity, banks will be more selective in their
lending decisions, resulting in more limited credit expansion.
INFLATION FORECAST
Inflation in 2008 is forecasted in the range of 11.5%-12.5% (y-o-y).Inflation in 2008 is forecasted in the range of 11.5%-12.5% (y-o-y).Inflation in 2008 is forecasted in the range of 11.5%-12.5% (y-o-y).Inflation in 2008 is forecasted in the range of 11.5%-12.5% (y-o-y).Inflation in 2008 is forecasted in the range of 11.5%-12.5% (y-o-y). Analysed by
component, 2008 inflation is being driven primarily by core inflation and
administered prices. The high rate of core and administered prices inflation in 2008
is explained most importantly by high food and energy prices and secondly the
hike in domestic fuel prices. Inflationary pressure at end-2008 is predicted to remain
strong, albeit on a downward trend. This year, fourth quarter inflationary pressure
- usually driven by foodstuffs inflation as the planting season gets under way - is
expected to be low. Key to this is the large-scale procurement of rice by the National
Logistics Agency (Bulog). In addition, the downward trend in international
commodity prices followed by falling inflation in trading partner countries is expected
to have a positive effect on reduced domestic inflation.
In 2009, inflation is projected to drop to the 6.5%-7.5% range.In 2009, inflation is projected to drop to the 6.5%-7.5% range.In 2009, inflation is projected to drop to the 6.5%-7.5% range.In 2009, inflation is projected to drop to the 6.5%-7.5% range.In 2009, inflation is projected to drop to the 6.5%-7.5% range. The main factors
driving inflation will again be core inflation and administered prices. Concerning
core inflation, substantial demand-side pressures from 2008 are predicted to carry
forward into 2009, mainly in regard to the preparations for the national elections.
Inflation from administered prices is forecasted to stay high due to the ongoing
conversion from household kerosene to bottled LPG and the possibility of hikes in
other administered prices following the formation of a new government. In 2009,
inflationary pressure from volatile foods is forecasted to be minimal, in part due to
large-scale Bulog rice procurements.
In regard to inflation-forming components, inflation expectations are expected to
lighten, although remaining high. The improvement in public inflation expectations
is linked mainly to the downward trend in inflation. The improvement in inflation
expectations has taken place mainly among consumers and traders.
In regard to supply-demand interaction, there are indications of rising demand
although the impact on inflation is reportedly still minimal. Nevertheless, the high
rate of investment growth since Q3/2007 is expected to enable a supply-side
response to increased demand, keeping the impact on inflation to a minimum.
Inflationary pressure from external developments is predicted to ease. Key to the
softening of inflationary pressure from externals are falling prices for oil and other
commodities. Lower international commodity prices will reduce inflationary pressure
Monetary Policy Report - Quarter III-2008
30
in trading partner countries, which in turn will mitigate domestic inflationary pressure
through imported inflation.
Inflationary pressure from administered prices is forecasted to remain strong. This
high pressure is related mainly to the kerosene to LPG conversion programme slated
to carry forward into 2009. Otherwise, the government is not expected to raise
prices for administered items until the formation of a new elected government in
Q3/2009. Reinforcing this, inflationary pressure from volatile foods is expected to
be minimal. As of September 2008, Bulog had built up a buffer stock of 2.3 million
tons of rice in a move expected to bring volatile foods inflation to below historical
levels. At end-2008, Bulog»s rice stocks are targeted to reach 2.8-3.0 million tons.
This represents the highest ever level of rice procurement in the history of the
agency. In addition, the downward trend in oil and other commodity prices will
also have a positive effect on control of volatile foods inflation. In 2009, domestic
food production is expected to be maintained at high levels in response to the
agricultural productivity improvement programme operating through provision of
hybrid seeds, subsidised fertilisers and improvements in agricultural infrastructure.
RISKS
Overshadowing the economic growth outlook are external risks. Overshadowing the economic growth outlook are external risks. Overshadowing the economic growth outlook are external risks. Overshadowing the economic growth outlook are external risks. Overshadowing the economic growth outlook are external risks. The most important
risk lies with the condition of the US economy if the various policy actions by the
fiscal and monetary authorities prove ineffective in turning around the nation»s
financial crisis. Any further downturn in US economic growth will spill over to slowing
growth in the Eurozone economies and from there to growth in the developing
world. If world economic growth drops further, the result will be reduced growth in
volume of world trade. The consequences of this may be further blows to growth
in exports of goods and services.
Inflation risks are likely to arise mainly from administered prices components, suchInflation risks are likely to arise mainly from administered prices components, suchInflation risks are likely to arise mainly from administered prices components, suchInflation risks are likely to arise mainly from administered prices components, suchInflation risks are likely to arise mainly from administered prices components, such
as fuel pricesas fuel pricesas fuel pricesas fuel pricesas fuel prices. In the Draft Law on Regional Taxes and User Charges, provincial
governments are given power to set the level of automotive fuel taxes in the range
of 0%-10%. The draft law also contains provisions concerning cigarette taxes and
parking taxes that will also have some effect in stoking inflationary pressure. The
hefty subsidies for fuel, electricity billing rates and LPG underscore the potential for
increases in the selling prices for these commodities. Such developments will also
work directly and indirectly to boost future inflationary pressures.
Monetary Policy Response Q3/2008
31
5. Monetary Policy Response Q3-2008
The Indonesian economic growth is projected to stay high and arrive at 6,3%(yoy).The Indonesian economic growth is projected to stay high and arrive at 6,3%(yoy).The Indonesian economic growth is projected to stay high and arrive at 6,3%(yoy).The Indonesian economic growth is projected to stay high and arrive at 6,3%(yoy).The Indonesian economic growth is projected to stay high and arrive at 6,3%(yoy).
For the whole 2008, up until the completion of general election in 2009, the
economic growth is projected to remain in a sound condition. It is mainly supported
by private consumption and government expenditure. Related to inflation,
inflationary pressure in 2008 mostly sourced from the impact of fuel price hike and
the rise of international commodity prices. In addition, Bank Indonesia also considers
strong demand pressure along with higher credit growth and money supply up to
Q3-2008. Furthermore, Bank Indonesia also closely watches on the recent
development in global money market, particularly US, and its impact on domestic
economic performance.
Bank Indonesia»s key focus is to bring down future inflationary pressure. Moving
forward, inflationary pressure is predicted to be driven by public expectation on
inflation, domestic demand, and imported inflation. Therefore, the Bank IndonesiaTherefore, the Bank IndonesiaTherefore, the Bank IndonesiaTherefore, the Bank IndonesiaTherefore, the Bank Indonesia
Board of Governor»s Meeting in October 2008 decided to raise BI Rate by 25 bps toBoard of Governor»s Meeting in October 2008 decided to raise BI Rate by 25 bps toBoard of Governor»s Meeting in October 2008 decided to raise BI Rate by 25 bps toBoard of Governor»s Meeting in October 2008 decided to raise BI Rate by 25 bps toBoard of Governor»s Meeting in October 2008 decided to raise BI Rate by 25 bps to
9,50%.9,50%.9,50%.9,50%.9,50%.
In an attempt to manage inflation, Bank Indonesia will optimize the use of all
monetary policy instruments available. Moreover, Rupiah stabilisation policy will be
directed to reduce excessive Rupiah volatility. The current pressures on Rupiah is in
line with the current development of regional currency. With those policies, Bank
Indonesia projected inflation in 2008 will be within 11,5% √ 12,5% range and go
down to 6,5% √ 7,5%.range in 2009.
The momentum of Indonesian economic growth remains stable while facing the
US financial crisis. Furthermore, the stability and reliability of Indonesian financial
system is predicted to remain sound. Moving forward, Bank Indonesia will continue
its close coordination with Government in examining all the developments and
taking steps when considered necessary.
Monetary Policy Report - Quarter III-2008
32
Statistics
12.70 11.40 11.90 12.90 13.22 14.16 17.98 18.08 17.85
8.95 9.53 10.31 11.55 12.21 12.93 17.95 17.41 17.43
4.89 8.66 7.67 8.58 10.47 11.90 17.27 16.07 16.53
4.65 8.31 6.62 7.14 8.25 10.39 16.13 15.07 15.44
5.87 7.42 5.86 6.11 6.79 8.93 14.49 14.61 15.12
4.24 7.34 6.23 6.31 6.36 7.68 9.31 14.10 14.64
4.13 7.39 6.31 6.61 6.89 7.27 8.94 13.80 14.33
3.76 7.43 6.43 6.71 7.12 7.07 8.12 13.41 14.05
5.95 7.44 6.50 6.93 7.35 8.04 9.42 13.31 13.78
6.95 8.25 6.98 7.19 7.11 7.11 8.05 13.36 13.65
6.92 10.00 9.16 8.51 8.01 8.65 8.82 14.51 14.47
9.44 12.75 11.98 11.75 10.17 10.95 12.39 16.23 15.66
10.28 12.73 11.61 12.19 12.10 12.02 12.64 16.35 15.90
10.23 12.50 11.34 11.70 12.09 12.28 12.61 16.15 15.94
8.90 11.25 10.47 11.05 11.52 12.36 12.47 15.82 15.66
5.97 9.75 8.96 9.71 10.70 11.63 11.84 15.07 15.10
7.52 9.00 8.13 8.52 9.29 10.17 11.73 14.49 14.53
5.58 8.75 7.46 7.87 8.40 9.54 11.73 13.88 13.99
6.83 8.25 7.13 7.44 7.80 8.91 11.24 13.31 13.45
4.33 8.00 7.19 7.42 7.65 8.24 10.83 13.00 13.01
8.01 7.96 6.88 7.26 7.57 7.79 10.06 12.88 12.59
8.43 8.73 7.19 7.49 7.79 7.78 9.91 12.99 12.51
9.37 9.71 8.04 8.40 8.43 8.51 9.93 13.42 12.86
2003Qtr. I
Qtr. II
Qtr. III
Qtr. IV
2004Qtr. I
Qtr. II
Qtr. III
Qtr. IV
2005Qtr. I
Qtr. II
Qtr. III
Qtr. IV
2006Qtr. I
Qtr. II
Qtr. III
Qtr. IV
2007Qtr. I
Qtr. II
Qtr. III
Qtr. IV
2008Qtr. I
Qtr. II
Qtr. III
* August 2008
Table 1
Interest Rate of Money Market, Deposits, and Credit
(Percent per Annum)
PeriodInterbank
MoneyMarket
SBIDiscount
Rate
Time Deposit Interest Rate* Credit Interest Rate*
1month
3months
6months
12months
24months
WorkingCapital
Investment
Statistics
33
2003
Qtr. I
Qtr. II
Qtr. III
Qtr. IV
2004
Qtr. I
Qtr. II
Qtr. III
Qtr. IV
2005
Qtr. I
Qtr. II
Qtr. III
Qtr. IV
2006
Qtr. I
Qtr. II
Qtr. III
Qtr. IV
2007
Qtr. I
Qtr. II
Qtr. III
Qtr.IV
2008
Qtr. I
Qtr. II
Qtr. III*
104,122 283,754 242,833 119,948
136,517 289,478 285,929 123,496
118,181 350,175 340,437 133,234
125,166 321,710 347,918 107,026
142,003 354,841 321,477 140,390
87,082 283,275 304,891 118,776
165,064 252,542 339,339 31,979
204,336 293,933 252,929 103,825
216,381 369,495 415,784 57,536
237,571 362,770 315,996 101,058
250,610 230,026 289,657 41,427
264,348 183,663 150,534 74,632
310,175 415,638 356,471 133,799
280,836 517,853 483,967 167,685
286,958 599,495 586,715 180,464
329,312 665,673 636,381 209,756
495,786 774,866 740,951 243,671
362,339 846,655 832,325 258,002
413,527 895,562 887,411 266,152
313,544 777,247 795,475 247,926
368,429 858,289 905,499 212,463
246,462 481,412 537,580 163,103
217,134 313,979 327,188 149,893
Table 2
Money Market Transactions
(Billions of Rupiah)
* August 20081) Morning Transaction2) Transaction between Bank Indonesia and Commercial Banks only. Since March 1994 includes Repo SBPU
Bank Indonesia Certificate (SBI) 2)
Period Interbank
Transaction1) Issuance Repayment Outstanding
Monetary Policy Report - Quarter III-2008
34
I II III IV I II III IV I II III IV I II III*
1 State Bank
- Agriculture
- Mining
- Industry
- Trade
- Services
- Others
2 Private National Foreign Bank
- Agriculture
- Mining
- Industry
- Trade
- Services
- Others
3 Regional Government Bank
- Agriculture
- Mining
- Industry
- Trade
- Services
- Others
4 Foreign and Joint Bank
- Agriculture
- Mining
- Industry
- Trade
- Services
- Others
5 Sub total (1 until 4)
- Agriculture
- Mining
- Industry
- Trade
- Services
- Others
223,025223,025223,025223,025223,025 235,274235,274235,274235,274235,274 243,678243,678243,678243,678243,678 250,319250,319250,319250,319250,319 247,331247,331247,331247,331247,331 256,267256,267256,267256,267256,267 264,735264,735264,735264,735264,735 282,784282,784282,784282,784282,784 282,633282,633282,633282,633282,633 301,186301,186301,186301,186301,186 314,427314,427314,427314,427314,427 348,973348,973348,973348,973348,973 350,232350,232350,232350,232350,232 394,065394,065394,065394,065394,065 414,617414,617414,617414,617414,617
20,340 20,411 20,797 21,908 21,649 22,110 23,012 25,816 24,222 26,805 28,433 30,281 30,711 32,381 33,585
4,292 4,338 3,932 3,249 3,007 3,428 3,485 4,771 7,414 9,006 6,556 10,647 13,371 14,922 13,908
60,466 60,985 63,507 65,781 63,402 64,567 64,265 71,165 71,600 69,959 69,450 72,810 72,706 81,038 83,777
44,881 47,275 48,095 49,809 52,729 57,548 61,031 61,431 63,561 68,172 75,722 85,601 79,209 92,719 97,054
31,966 35,446 37,647 37,448 36,148 37,094 39,269 43,481 39,477 44,868 47,465 55,587 55,271 64,182 71,485
61,080 66,819 69,700 72,124 70,396 71,520 73,673 76,120 76,359 82,376 86,801 94,047 98,964 108,823 114,808
235,224235,224235,224235,224235,224 257,749257,749257,749257,749257,749 284,411284,411284,411284,411284,411 295,013295,013295,013295,013295,013 291,817291,817291,817291,817291,817 302,693302,693302,693302,693302,693 313,651313,651313,651313,651313,651 334,943334,943334,943334,943334,943 335,998335,998335,998335,998335,998 367,168367,168367,168367,168367,168 394,451394,451394,451394,451394,451 432,595432,595432,595432,595432,595 451,967451,967451,967451,967451,967 500,718500,718500,718500,718500,718 520,732520,732520,732520,732520,732
8,915 9,015 9,625 9,541 9,693 10,248 10,316 11,430 11,312 12,053 12,467 15,533 15,571 18,298 18,231
2,376 2,694 3,409 3,267 2,935 3,414 3,775 6,460 5,409 7,321 7,076 10,678 9,621 10,137 10,714
45,627 48,206 53,904 55,185 53,304 57,119 58,125 61,525 59,826 63,319 68,670 73,840 77,952 84,610 86,953
57,560 63,736 67,300 71,098 70,729 74,997 78,679 85,628 86,783 95,549 100,883 108,726 111,756 123,057 124,659
56,553 61,358 65,925 68,660 69,006 71,371 74,729 78,963 80,252 90,497 98,503 110,144 115,400 131,115 139,169
64,193 72,740 84,248 87,262 86,150 85,544 88,027 90,937 92,416 98,429 106,852 113,674 121,667 133,501 141,006
38,97638,97638,97638,97638,976 42,02442,02442,02442,02442,024 44,51044,51044,51044,51044,510 44,90944,90944,90944,90944,909 47,23547,23547,23547,23547,235 51,14151,14151,14151,14151,141 55,00955,00955,00955,00955,009 55,95955,95955,95955,95955,959 58,85158,85158,85158,85158,851 65,12365,12365,12365,12365,123 70,93770,93770,93770,93770,937 71,92171,92171,92171,92171,921 75,06575,06575,06575,06575,065 85,33985,33985,33985,33985,339 91,52591,52591,52591,52591,525
1,406 1,514 1,557 1,640 1,729 1,860 1,922 2,030 2,090 2,130 2,248 2,274 2,379 2,710 3,107
36 41 52 54 57 56 54 58 58 58 55 43 53 182 196
439 504 451 421 430 471 476 457 487 520 543 631 710 770 783
6,683 7,269 7,546 7,532 7,668 8,058 8,312 8,239 8,386 8,762 9,295 9,617 10,191 11,504 11,722
5,108 5,260 6,058 5,633 5,851 6,561 7,531 6,915 6,776 7,747 9,850 8,879 8,615 10,831 12,895
25,304 27,436 28,846 29,629 31,500 34,135 36,714 38,260 41,054 45,906 48,946 50,477 53,117 59,342 62,822
79,15579,15579,15579,15579,155 87,55587,55587,55587,55587,555 100,643100,643100,643100,643100,643 99,42899,42899,42899,42899,428 95,73095,73095,73095,73095,730 100,003100,003100,003100,003100,003 107,692107,692107,692107,692107,692 113,450113,450113,450113,450113,450 117,232117,232117,232117,232117,232 121,509121,509121,509121,509121,509 127,445127,445127,445127,445127,445 141,622141,622141,622141,622141,622 151,908151,908151,908151,908151,908 161,998161,998161,998161,998161,998 172,117172,117172,117172,117172,117
2,390 2,531 3,093 3,589 3,409 4,124 4,727 5,727 5,395 5,460 5,933 7,817 7,449 6,425 6,118
2,205 2,028 2,036 1,303 1,548 2,173 2,369 2,607 2,287 2,540 2,629 3,972 4,591 3,910 4,590
39,569 43,867 50,268 48,291 45,954 46,847 49,682 49,285 50,219 51,029 51,259 56,527 60,265 65,896 68,292
4,671 5,061 6,337 5,669 5,357 5,865 6,663 7,098 7,691 9,035 10,379 11,726 11,383 13,022 13,806
17,920 20,044 22,881 23,202 21,258 21,721 24,726 28,279 30,709 31,540 34,679 37,831 43,878 46,763 52,597
12,400 14,024 16,028 17,374 18,204 19,273 19,525 20,454 20,931 21,905 22,566 23,749 24,342 25,982 26,714
576,380576,380576,380576,380576,380 622,602622,602622,602622,602622,602 673,242673,242673,242673,242673,242 689,669689,669689,669689,669689,669 682,113682,113682,113682,113682,113 710,104710,104710,104710,104710,104 741,087741,087741,087741,087741,087 787,136787,136787,136787,136787,136 794,714794,714794,714794,714794,714 854,986854,986854,986854,986854,986 907,260907,260907,260907,260907,260 995,111995,111995,111995,111995,111 1,029,1721,029,1721,029,1721,029,1721,029,172 1,142,1201,142,1201,142,1201,142,1201,142,120 1,198,9911,198,9911,198,9911,198,9911,198,991
33,051 33,471 35,072 36,678 36,480 38,342 39,977 45,003 43,019 46,448 49,081 55,905 56,110 59,814 61,041
8,909 9,101 9,429 7,873 7,547 9,071 9,683 13,896 15,168 18,925 16,316 25,340 27,636 29,151 29,408
146,101 153,562 168,130 169,678 163,090 169,004 172,548 182,432 182,132 184,827 189,922 203,808 211,633 232,314 239,805
113,795 123,341 129,278 134,108 136,483 146,468 154,685 162,396 166,421 181,518 196,279 215,670 212,539 240,302 247,241
111,547 122,108 132,511 134,943 132,263 136,747 146,255 157,638 157,214 174,652 190,497 212,441 223,164 252,891 276,146
162,977 181,019 198,822 206,389 206,250 210,472 217,939 225,771 230,760 248,616 265,165 281,947 298,090 327,648 345,350
2005 2006 2007 2008
* August 20081) Excluded central government, non-resident, foreign counter part value, and managable credit.
Table 3
Outstanding of Credits in Rupiah and Foreign Currency of Commercial Banks by Group of Banks and Economic Sector 1)
(Billions of Rupiah)
Statistics
35
877,776 181,239 72,323 108,916 696,537 249,736 510,307 22,364 377,989 -282,620
894,213 194,537 77,091 117,787 699,335 236,660 506,218 24,436 393,439 -266,540
911,224 207,234 81,118 126,469 703,637 240,781 481,552 24,248 416,534 -251,891
955,692 223,799 94,542 129,257 731,893 271,785 479,013 24,087 442,741 -261,969
935,247 219,086 86,881 132,205 716,161 275,819 443,440 22,803 454,663 -261,518
975,166 233,726 97,574 136,152 741,440 280,070 468,907 27,806 522,161 -323,778
986,806 240,911 99,505 141,406 745,895 258,684 476,451 25,261 551,562 -325,152
1,033,528 253,818 109,265 144,553 779,710 263,647 498,019 26,919 588,885 -343,940
1,020,693 250,492 98,584 151,908 770,201 268,482 456,274 28,257 612,463 -344,783
1,073,746 267,635 106,125 161,510 806,111 256,058 468,004 28,237 659,129 -337,682
1,150,451 273,954 114,998 158,956 876,497 280,369 488,483 29,805 708,018 -356,224
1,203,215 281,905 124,316 157,589 921,310 313,082 498,901 28,059 710,783 -347,610
1,195,067 277,293 112,625 164,668 917,774 347,970 470,048 25,557 705,321 -353,829
1,253,757 313,153 123,761 189,392 940,604 345,457 481,654 29,746 729,609 -332,709
1,291,396 333,905 129,969 203,936 957,491 401,065 481,641 31,858 758,261 -381,429
1,382,074 361,073 151,009 210,064 1,021,001 413,265 506,488 38,946 798,125 -374,750
1,375,947 341,833 129,618 212,215 1,034,114 457,382 447,655 35,032 810,996 -375,118
1,451,974 381,376 146,715 234,661 1,070,598 496,522 430,956 44,185 865,144 -384,833
1,512,756 411,281 160,327 250,954 1,101,475 519,360 439,649 45,496 916,657 -408,406
1,643,203 460,842 183,419 277,423 1,182,361 524,703 497,478 56,152 984,844 -419,974
1,586,795 419,746 164,995 254,751 1,167,049 549,049 375,976 49,644 1,025,856 -413,730
1,699,480 466,708 189,453 277,255 1,232,772 562,636 359,645 57,304 1,131,796 -411,901
1,675,431 452,445 191,866 260,579 1,222,986 534,841 306,411 57,974 1,188,306 -412,101
2003
Qtr. I
Qtr. II
Qtr. III
Qtr. IV
2004
Qtr. I
Qtr. II
Qtr. III
Qtr. IV
2005
Qtr. I
Qtr. II
Qtr. III
Qtr. IV
2006
Qtr. I
Qtr. II
Qtr. III
Qtr. IV
2007
Qtr. I
Qtr. II
Qtr. III
Qtr. IV
2008
Qtr. I
Qtr. II
Qtr. III*
* August 20081) M1 plus Quasi Money2) Currency Outside Banks plus Demand Deposits3) Including government special of bill
Table 4
Money Supply and Its Affecting Factors
(Billion of Rupiah)
M2 Affecting Factors
End ofPeriod
Total 1) Total 2)
M1
CurrencyOutsideBanks
DemandDeposits
QuasiMoney
Net ForeignAssets
NetClaims On
CentralGovt.3)
Claims OnOfficial
Entities andState
Enterprises
Claims OnPrivate
Enterprisesand
Individuals
NetOtherItems
Monetary Policy Report - Quarter III-2008
36
184,878 198,427 224,414 239,781 233,878 247,742 257,843 297,080 272,239 289,727 310,265 379,582 325,044 349,649 392,136
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
116,376 124,427 134,871 144,869 135,005 145,666 153,569 178,572 155,498 173,888 189,221 220,785 198,940 224,342 270,243
98,584 106,125 114,998 124,316 112,625 123,761 129,969 151,009 129,618 146,715 160,327 183,419 164,995 189,453 222,945
17,792 18,302 19,873 20,553 22,380 21,905 23,600 27,563 25,880 27,173 28,894 37,366 33,945 34,889 47,298
67,798 73,446 89,079 94,531 98,544 101,751 104,061 118,417 116,558 115,524 120,740 158,452 125,705 124,811 121,302
704 554 464 381 329 325 213 91 183 315 304 345 399 496 591
173,283 163,760 141,548 173,806 213,530 213,143 255,182 274,694 305,744 330,295 337,523 356,883 351,874 351,561 355,967
11,595 34,667 82,866 65,975 20,348 34,599 2,661 22,386 -33,505 -40,569 -27,258 22,699 -26,830 -1,912 36,169
187,988 197,653 210,909 239,148 209,557 218,033 219,538 265,919 200,460 187,081 184,961 249,069 128,907 117,614 123,797
27,310 27,310 27,307 18,238 18,226 18,226 18,226 18,196 18,186 18,136 18,136 8,847 8,838 8,800 8,800
12,222 11,987 11,800 11,593 11,372 11,165 11,035 10,832 10,598 10,366 10,206 9,994 9,751 9,353 9,227
9,116 10,141 10,169 5,408 5,475 5,491 5,494 5,352 5,366 5,389 5,357 3,074 3,089 3,295 3,155
-130,783 -115,143 -61,917 -121,325 -142,637 -174,258 -189,131 -242,001 -247,525 -264,280 -254,096 -281,164 -219,099 -191,525 -152,563
-57,611 -101,134 -41,503 -74,632 -133,798 -167,685 -180,382 -208,763 -239,977 -257,998 -265,034 -247,688 -212,463 -165,145 -116,967
-73,172 -21,060 -17,603 -57,212 -16,615 -14,241 -16,829 -41,568 -19,298 -21,615 -4,750 -48,933 -5,737 -4,989 -1,403
7,051 10,216 10,519 7,776 7,668 8,080 8,330 11,750 15,333 15,688 15,457 14,356 14,172 15,929
-94,258 -97,281 -115,402 -87,087 -81,645 -68,704 -62,501 -35,912 -20,590 2,739 8,178 32,879 41,684 50,551 43,752
2005 2006 2007 2008
I II III IV I II III IV I II III IV I II III
1) Before June 1997 : NFA, after June 1997 : NIR using constant rate Rp7,000/$Since 1998 up to March 1999 using constant rate Rp10,000/$Since April 1999 using constant rate Rp7,500/$Since 21 November 1999 using constant rate Rp7,000/$Sejak 25 Mei 2000 untuk perhitungan NIR menggunakan konsep IRFCL(Int'l Reserve and Foreign Currency Liquidity)
2) Since March 2000 include SBI Syariah3) including Government Bonds and FTO (Fine Tune Operation)
I.I.I.I.I. Base MoneyBase MoneyBase MoneyBase MoneyBase Money
a. Statutory Reserve Shortfall
b. Currency
- Currency outside bank
- Cash in vaults
c. Commercial Banks Positive Balance
d. Private Sector Demand Deposits
II.II.II.II.II. Factor Affecting Base MoneyFactor Affecting Base MoneyFactor Affecting Base MoneyFactor Affecting Base MoneyFactor Affecting Base Money
a.a.a.a.a. Net International Reserve 1)Net International Reserve 1)Net International Reserve 1)Net International Reserve 1)Net International Reserve 1)
b.b.b.b.b. Net Domestic AssetsNet Domestic AssetsNet Domestic AssetsNet Domestic AssetsNet Domestic Assets
- Net Claims on Central Government
- Liquidity Support
- Liquidity Credits
- Others Claims
- Open Market
- SBI (net) 2)
- FASBI
- Others 3)
- Net Other Items
Table 5
Base Money and Its Affecting Factors
(Billions of Rupiah)
Statistics
37
2005 2006 2007* 2008**
I II III IV Total I II III IV Total I II III IV Total I II
* Temporary figures.** Very Temporary figures.1) New format since January 2004 publication.2) Not included IMF package3) Negative represents surplus and positive represents deficit4) Since1988, reserve assets position is based on Gross Foreign Asset Replacing Official Reserve. Since 2000 reserve assets position is based on International Reserve and
Foreign Currency Liquidity (IRFCL).5) Ratio of external debt service payments to export of goods and services.6) Consists of Government, State Owned Enterprises Except Banks, and Bank Indonesia.
209209209209209 436436436436436 -1,165-1,165-1,165-1,165-1,165 797797797797797 278278278278278 2,9492,9492,9492,9492,949 1,9591,9591,9591,9591,959 3,7723,7723,7723,7723,772 2,1552,1552,1552,1552,155 10,83610,83610,83610,83610,836 2,5972,5972,5972,5972,597 2,2742,2742,2742,2742,274 2,1422,1422,1422,1422,142 3,3893,3893,3893,3893,389 10,40110,40110,40110,40110,401 2,3282,3282,3282,3282,328 -1,477-1,477-1,477-1,477-1,477
3,177 4,057 3,502 6,799 17,534 6,693 6,986 8,596 7,386 29,660 7,712 8,107 7,487 9,448 32,754 7,526 5,354
20,201 21,663 21,996 23,135 86,995 23,262 25,484 27,604 27,178 103,528 26,626 29,202 30,009 32,177 118,014 34,400 37,255-17,024 -17,607 -18,495 -16,337 -69,462 -16,569 -18,498 -19,008 -19,792 -73,868 -18,914 -21,095 -22,521 -22,729 -85,260 -26,874 -31,901
-1,911 -1,176 -2,305 -3,730 -9,122 -2,289 -2,351 -2,416 -2,831 -9,888 -3,162 -2,962 -2,753 -2,920 -11,797 -2,973 -3,274
-2,168 -3,464 -3,568 -3,726 -12,927 -2,660 -3,873 -3,728 -3,538 -13,800 -3,163 -4,024 -3,810 -4,526 -15,524 -3,536 -4,889
1,111 1,020 1,207 1,455 4,793 1,205 1,198 1,321 1,139 4,863 1,210 1,153 1,218 1,387 4,968 1,312 1,332
-772-772-772-772-772 411411411411411 -3,298-3,298-3,298-3,298-3,298 4,0054,0054,0054,0054,005 345345345345345 2,5072,5072,5072,5072,507 322322322322322 -1,179-1,179-1,179-1,179-1,179 1,2941,2941,2941,2941,294 2,9442,9442,9442,9442,944 1,7991,7991,7991,7991,799 1,9831,9831,9831,9831,983 -945-945-945-945-945 485485485485485 3,3223,3223,3223,3223,322 -337-337-337-337-337 3,7253,7253,7253,7253,725
0 33 100 200 333 72 49 97 132 350 43 127 255 122 546 41 57
-772 377 -3,398 3,805 12 2,435 273 -1,276 1,161 2,594 1,756 1,856 -1,200 363 2,776 -378 3,668
207 3,132 878 1,055 5,271 681 572 -273 1,232 2,211 -225 1,424 778 162 2,139 1,106 958-651 -615 -879 -920 -3,065 -654 -517 -1,328 -204 -2,703 -1,262 390 -1,413 -2,505 -4,790 -1,711 -1,929858 3,747 1,757 1,975 8,336 1,336 1,088 1,055 1,435 4,914 1,037 1,034 2,191 2,667 6,928 2,817 2,887395 -805 1,738 2,862 4,190 3,712 -1,057 207 1,312 4,174 2,491 3,769 463 -1,200 5,523 1,923 4,314
-339 -63 -462 -216 -1,080 -392 -446 -332 -762 -1,933 -497 -1,939 -1,259 -764 -4,459 -823 74734 -742 2,200 3,078 5,270 4,104 -611 539 2,074 6,107 2,988 5,707 1,722 -437 9,981 2,746 4,240
-1,374 -1,949 -6,014 -112 -9,449 -1,959 759 -1,209 -1,382 -3,791 -510 -3,337 -2,441 1,402 -4,885 -3,407 -1,604-631 -1,816 -4,648 -1,551 -8,646 -1,349 1,704 -235 -1,707 -1,588 -162 -2,286 -2,382 234 -4,596 -2,961 -1,215-743 -134 -1,366 1,439 -803 -610 -945 -974 325 -2,204 -348 -1,051 -59 1,168 -289 -446 -389
-563-563-563-563-563 847847847847847 -4,463-4,463-4,463-4,463-4,463 4,8024,8024,8024,8024,802 623623623623623 5,4565,4565,4565,4565,456 2,2822,2822,2822,2822,282 2,5942,5942,5942,5942,594 3,4493,4493,4493,4493,449 13,78013,78013,78013,78013,780 4,3964,3964,3964,3964,396 4,2574,2574,2574,2574,257 1,1971,1971,1971,1971,197 3,8743,8743,8743,8743,874 13,72313,72313,72313,72313,723 1,9921,9921,9921,9921,992 2,2482,2482,2482,2482,248
916916916916916 -2,328-2,328-2,328-2,328-2,328 1,2941,2941,2941,2941,294 -61-61-61-61-61 -179-179-179-179-179 330330330330330 1,0971,0971,0971,0971,097 4343434343 -741-741-741-741-741 729729729729729 -17-17-17-17-17 -620-620-620-620-620 -17-17-17-17-17 -354-354-354-354-354 -1,008-1,008-1,008-1,008-1,008 -959,7758-959,7758-959,7758-959,7758-959,7758 -923,4224-923,4224-923,4224-923,4224-923,4224
352352352352352 -1,480-1,480-1,480-1,480-1,480 -3,169-3,169-3,169-3,169-3,169 4,7424,7424,7424,7424,742 444444444444444 5,7865,7865,7865,7865,786 3,3793,3793,3793,3793,379 2,6372,6372,6372,6372,637 2,7082,7082,7082,7082,708 14,51014,51014,51014,51014,510 4,3794,3794,3794,3794,379 3,6373,6373,6373,6373,637 1,1791,1791,1791,1791,179 3,5203,5203,5203,5203,520 12,71512,71512,71512,71512,715 1,0321,0321,0321,0321,032 1,3241,3241,3241,3241,324
-352-352-352-352-352 1,4801,4801,4801,4801,480 3,1693,1693,1693,1693,169 -4,742-4,742-4,742-4,742-4,742 -444-444-444-444-444 -5,786-5,786-5,786-5,786-5,786 -3,379-3,379-3,379-3,379-3,379 -2,637-2,637-2,637-2,637-2,637 -2,708-2,708-2,708-2,708-2,708 -14,510-14,510-14,510-14,510-14,510 -4,379-4,379-4,379-4,379-4,379 -3,637-3,637-3,637-3,637-3,637 -1,179-1,179-1,179-1,179-1,179 -3,520-3,520-3,520-3,520-3,520 -12,715-12,715-12,715-12,715-12,715 -1032,129-1032,129-1032,129-1032,129-1032,129 -1324,343-1324,343-1324,343-1324,343-1324,343-49 1,729 3,483 -4,500 663 -5,359 354 -2,189 292 -6,902 -4,379 -3,637 -1,179 -3,520 -12,715 -1,032 -1,324
-303 -249 -313 -241 -1,107 -427 -3,733 -448 -3,001 -7,608 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
-303 -249 -313 -241 -1,107 -427 -3,733 -448 -3,001 -7,608 0 0 0 0 0 0 0
36,030 33,865 30,318 34,724 34,724 40,082 40,107 42,353 42,586 42,586 47,221 50,924 52,875 56,920 56,920 58,987 59,4530.1 2.9 2.4
16.8 21.6 17.3 13.6 17.3 17.4 30.6 17.5 33.2 24.8 19.8 21.4 15.2 21.2 19.4 16.4 18.0
8.7 5.8 6.7 5.7 6.7 9.8 21.0 7.1 18.6 14.2 5.6 9.4 5.1 9.0 7.3 4.5 7.8
Table 6
Indonesia Current Account Payment 1)
(Millions of $)
I. Current Account
A.A.A.A.A. Goods, net (Trade Balance)Goods, net (Trade Balance)Goods, net (Trade Balance)Goods, net (Trade Balance)Goods, net (Trade Balance)Export f.o.bImport f.o.b
B.B.B.B.B. Services (net)Services (net)Services (net)Services (net)Services (net)
C.C.C.C.C. Income (net)Income (net)Income (net)Income (net)Income (net)
D.D.D.D.D. Current Transfers (net)Current Transfers (net)Current Transfers (net)Current Transfers (net)Current Transfers (net)
II. Capital and Financial Account
A.A.A.A.A. Capital AccountCapital AccountCapital AccountCapital AccountCapital Account
B.B.B.B.B. Financial AccountFinancial AccountFinancial AccountFinancial AccountFinancial Account
1. Direct InvestmentAbroad (net)Domestic (FDI), (net)
2. Portfolio InvestmentAsset (net)Liability (net)
3. Other InvestmentAsset (net)Liabiliaty (net) 2)
III. Total (I + II)
IV. Errors and Omissions
V. Overall Balance (III + IV)
VI.Monetary Movements 3)
Changes in Reserves Assets 3)
a.l. Transactiona.l. Transactiona.l. Transactiona.l. Transactiona.l. Transaction
IMF:IMF:IMF:IMF:IMF:PurchasesRepurchases
Memorandum:Reserve Assets Posistion 4)
Current Account (% GDP)Debt Service Ratio (%) 5)
a.1. Government Related &Monetary Authorities 6)
Monetary Policy Report - Quarter III-2008
38
Notes :
1) Index quarterly changes.
CPI Calculated based on 2002 prices (2002 = 100).
* Started in 1 Juli 2008, CPI Calculated based on 2007 prices (2007 = 100), quarter II-2008 data is mtm inflation data (month to month) June 2008
Sources: BPS-Statistic Indonesia (processed)
4.604.604.604.604.60 0.540.540.540.540.54 1.271.271.271.271.27 6.056.056.056.056.05 3.713.713.713.713.71 -1.21-1.21-1.21-1.21-1.21 4.004.004.004.004.00 4.434.434.434.434.43 5.915.915.915.915.91 1.281.281.281.281.28 4.754.754.754.754.7516.54 -0.58 2.60 8.63 12.16 -6.50 0.69 3.48 2.59 2.11 0.60-0.03 3.50 5.62 -0.25 -2.93 5.12 9.08 -2.04 4.14 0.29 13.941.54 0.29 3.66 1.46 1.37 -2.71 4.65 2.11 5.84 2.01 12.120.16 2.22 2.72 1.64 0.35 0.39 3.06 0.73 7.87 1.84 8.04
-2.18 2.48 1.96 2.55 -1.02 4.05 11.46 0.26 6.88 -0.19 8.943.77 -2.28 1.00 11.87 -0.30 -1.04 2.17 7.39 2.42 1.68 3.790.95 0.11 1.73 1.72 3.81 2.61 4.49 7.90 28.51 1.84 5.933.21 0.16 0.50 4.46 2.21 1.39 2.87 1.79 1.38 0.89 7.303.23 -1.21 -13.98 24.41 -3.70 -8.06 -0.43 25.17 2.85 -0.07 -10.49
-0.65 0.38 1.41 3.65 8.63 12.79 7.09 6.71 15.72 1.47 -1.65-0.63 0.85 4.36 3.13 1.32 1.50 0.75 -1.47 2.02 1.00 3.57
2.192.192.192.192.19 1.001.001.001.001.00 0.800.800.800.800.80 2.242.242.242.242.24 1.891.891.891.891.89 1.191.191.191.191.19 1.331.331.331.331.33 1.851.851.851.851.85 4.024.024.024.024.02 1.331.331.331.331.33 2.622.622.622.622.622.13 0.91 0.96 2.25 1.67 1.00 1.35 2.36 5.50 1.63 2.833.01 0.87 0.31 1.95 1.75 0.20 0.46 -0.20 1.47 1.06 2.151.93 1.23 0.86 2.59 2.24 2.60 1.85 2.28 1.89 0.73 2.60
1.621.621.621.621.62 1.051.051.051.051.05 0.780.780.780.780.78 1.301.301.301.301.30 1.811.811.811.811.81 0.750.750.750.750.75 1.271.271.271.271.27 0.970.970.970.970.97 2.792.792.792.792.79 1.141.141.141.141.14 3.583.583.583.583.582.19 1.40 0.98 1.73 2.12 0.83 1.11 1.58 2.22 1.67 2.160.73 0.58 0.34 0.56 1.69 0.15 1.92 -0.45 4.69 -0.12 8.940.64 0.72 0.67 0.78 1.20 0.52 0.57 1.05 1.45 0.97 1.661.87 0.92 0.99 0.99 1.70 1.79 1.61 1.30 2.71 0.86 1.71
1.611.611.611.611.61 2.662.662.662.662.66 0.570.570.570.570.57 1.841.841.841.841.84 0.720.720.720.720.72 0.390.390.390.390.39 2.342.342.342.342.34 4.784.784.784.784.78 4.304.304.304.304.30 0.490.490.490.490.49 0.770.770.770.770.771.25 0.77 0.80 1.81 0.37 0.29 1.29 1.70 0.81 0.27 3.020.86 0.69 0.69 1.41 0.10 0.71 0.94 1.45 0.68 0.46 2.151.18 0.56 1.00 1.35 0.50 0.32 1.34 0.86 0.56 0.64 2.133.13 8.78 -0.22 2.47 2.09 0.35 5.53 13.60 12.66 0.59 -2.46
1.861.861.861.861.86 1.421.421.421.421.42 0.700.700.700.700.70 1.761.761.761.761.76 1.391.391.391.391.39 0.710.710.710.710.71 1.031.031.031.031.03 1.121.121.121.121.12 3.003.003.003.003.00 0.830.830.830.830.83 1.641.641.641.641.642.08 1.61 0.94 3.70 1.92 0.45 0.32 0.44 5.12 0.47 1.071.03 0.93 -0.19 0.18 1.32 0.82 1.08 1.46 1.96 1.31 2.191.94 1.03 0.84 0.80 1.16 1.85 0.61 0.73 1.15 1.10 2.362.11 1.43 0.77 0.72 1.46 0.80 1.56 1.52 2.32 0.90 1.76
0.030.030.030.030.03 0.410.410.410.410.41 7.447.447.447.447.44 0.200.200.200.200.20 0.360.360.360.360.36 0.010.010.010.010.01 7.977.977.977.977.97 0.430.430.430.430.43 0.140.140.140.140.14 0.440.440.440.440.44 3.773.773.773.773.77-0.76 0.02 11.41 0.12 0.46 0.03 12.73 0.36 0.09 0.18 6.762.40 0.19 2.31 0.23 1.04 0.26 0.87 0.48 0.72 0.45 4.950.45 1.79 3.61 0.27 0.36 0.36 1.58 0.66 0.30 0.72 1.141.70 0.82 0.06 0.28 0.13 -0.23 0.01 0.64 0.20 0.92 0.510.83 0.54 1.19 0.88 0.79 0.36 0.35 2.23 0.47 0.20 0.91
0.240.240.240.240.24 0.350.350.350.350.35 0.080.080.080.080.08 0.350.350.350.350.35 0.220.220.220.220.22 0.460.460.460.460.46 0.150.150.150.150.15 0.420.420.420.420.42 0.370.370.370.370.37 8.728.728.728.728.72 0.920.920.920.920.920.07 0.37 0.02 0.33 0.24 0.60 0.00 0.49 0.27 12.98 1.03
-0.02 0.02 -0.01 -0.01 0.05 0.01 -0.02 0.00 0.01 -0.12 0.021.89 1.09 1.26 1.56 0.50 0.24 2.43 1.27 1.40 0.84 1.345.36 0.45 0.05 0.01 0.01 0.01 0.00 0.00 4.90 0.01 3.89
1.981.981.981.981.98 0.870.870.870.870.87 1.161.161.161.161.16 2.442.442.442.442.44 1.911.911.911.911.91 0.170.170.170.170.17 2.282.282.282.282.28 2.092.092.092.092.09 3.413.413.413.413.41 2.462.462.462.462.46 2.882.882.882.882.88
2006 2007 2008
I II III IV I II III IV I II* III
I. FoodA. Cereal and ProductB. Meat and Meat ProductC. Fresh FishD. Dried FishE. Egg and MilkF. VegetablesG. Beans and NutsH. FruitsI. SpeciesJ. Fat and OilK. Others
II. Prepared Food, Beverage, Cigarettesand ClovesA. Prepared FoodB. Non-alcoholic-BeverageC. Cigarettes. Cloves. and Alcoholic Beverage
III. HousingA. Home Owner CostB. Fuel. Electricity. and WaterC. Household EquipmentD. Household Operation
IV. ClothingA. Clothing for MenB. Clothing for WomenC. Clothing for ChildrenD. Personal Effect and Other Clothing
V. HealthA. Medical Care and MedicineB. MedicineC. Personal CareD. Personal Care and Cosmetics
VI. Education, Culture, Sport, andEntertainmentA. EducationB. Courses and TrainingC. Education EquipmentD. RecreationE. Sport
VII. Transportation and CommunicationA. TransportationB. Communication and DeliveryC. Transport FacilityD. Financial Service
GENERAL
Table 7
Inflation Rate by Group of Goods and Services
(Percent)1)
Sub Group
Statistics
39
4.02 1.49 1.09 4.45 2.16 -2.16 5.34 -1.05 4.84 4.38 2.921.24 2.54 2.64 2.81 4.61 -1.67 5.85 1.94 3.49 2.75 1.361.34 0.71 2.74 4.93 1.92 -2.34 3.76 2.51 4.65 2.53 1.27
-2.17 0.83 1.90 1.07 6.92 -0.29 1.15 2.69 4.63 2.31 3.06-0.10 0.40 1.68 4.01 2.98 -0.55 3.78 1.97 3.07 2.88 1.371.41 0.29 0.85 3.31 1.63 -0.51 1.96 3.23 2.19 2.07 1.211.17 0.71 0.93 5.07 3.68 -1.96 2.06 3.05 4.35 4.09 2.040.73 0.89 1.21 3.36 3.67 -1.49 1.92 3.31 4.15 2.46 3.170.66 -0.40 2.30 1.97 1.40 -0.34 2.15 1.56 2.91 2.29 1.721.38 1.20 1.61 6.14 3.17 -1.22 2.57 2.75 2.16 4.19 1.762.43 0.57 0.96 4.27 0.64 0.85 3.23 3.28 3.11 3.41 3.200.10 1.32 1.23 3.76 1.36 -0.88 3.10 1.37 4.09 4.14 3.612.49 0.43 0.69 2.31 0.71 0.12 3.40 2.22 3.29 2.93 4.953.39 -0.16 2.16 0.93 2.62 -0.98 0.67 0.33 6.53 4.20 4.26
- - - - - - - - - 3.80 3.04- - - - - - - - - 2.45 3.33
2.30 0.33 1.21 2.07 1.95 0.51 1.85 1.61 3.51 1.94 -1.45 0.99 2.23 3.53 3.73 -0.04 1.65 2.20 2.57 2.54 -
- - - - - - - - - 2.21 -- - - - - - - - - 3.04 3.21- - - - - - - - - 2.11 0.88- - - - - - - - - 1.15 2.38- - - - - - - - - 2.80 3.42- - - - - - - - - 1.24 3.82- - - - - - - - - 2.45 3.49
1.53 0.57 1.26 1.87 1.13 -0.26 2.48 1.82 2.81 2.76 2.281.48 -0.12 0.63 4.23 3.24 0.15 2.22 2.06 3.52 3.33 4.042.14 1.36 2.21 2.48 2.22 1.33 2.21 0.26 3.60 2.75 3.532.43 0.85 0.36 2.41 1.19 -0.34 0.99 1.42 2.74 2.13 1.742.03 0.87 1.48 1.57 2.37 0.52 1.98 1.72 4.18 2.40 2.832.15 0.71 1.48 3.19 1.66 1.24 2.84 2.88 2.72 1.82 2.362.54 2.54 2.52 2.42 1.86 0.18 3.17 2.59 2.85 2.51 -1.78 1.52 0.70 2.68 1.26 0.78 2.13 2.91 2.73 3.46 -
- - - - - - - - - 1.62 2.832.48 1.19 0.80 3.11 2.50 -0.11 1.55 2.76 2.94 2.11 3.102.17 1.27 0.60 1.76 1.30 0.13 2.12 2.28 4.06 2.77 2.93
- - - - - - - - - 1.81 3.85- - - - - - - - - 4.05 2.27
2.15 0.99 0.81 2.61 1.09 0.90 2.02 2.12 3.59 2.00 2.562.44 0.56 -0.12 1.37 2.19 0.29 1.36 1.95 3.35 1.78 -1.63 0.61 -0.05 1.93 3.59 1.00 1.14 2.78 3.23 3.21 -
- - - - - - - - - 4.94 3.16- - - - - - - - - 2.24 6.66
4.81 0.46 0.86 3.32 5.29 -0.39 0.90 2.47 3.33 2.31 -2.19 0.98 1.72 1.29 2.56 1.14 2.12 2.49 4.21 2.27 -
- - - - - - - - - 2.94 2.731.59 3.94 0.30 1.74 0.81 0.39 1.84 4.38 1.60 2.87 -0.49 3.68 -0.52 3.94 0.62 -0.14 2.38 4.95 4.48 2.22 -1.31 6.15 0.10 3.14 3.29 -0.66 2.60 2.39 4.12 2.48 -2.53 1.90 -0.06 1.05 0.81 0.39 4.54 1.40 3.75 2.88 -1.43 1.87 2.44 0.61 1.72 0.52 4.84 1.85 3.97 3.32 -
2006 2007 2008
I II III IV I II III IV I II* III
1. Lhokseumawe2. Banda Aceh3. Padang Sidempuan4. Sibolga5. Pematang Siantar6. M e d a n7. Padang8. Pekanbaru9. Batam10. Jambi11. Palembang12. Bengkulu13. Bandar Lampung14. Pangkal Pinang15. Dumai16. Tanjung Pinang17. Jakarta18. Tasikmalaya19. Serang20. Tangerang21. Cilegon22. Bogor23. Sukabumi24. Bekasi25. Depok26. Bandung27. Cirebon28. Purwokerto29. Surakarta30. Semarang31. Tegal32. Yogyakarta33. Jember34. Sumenep35. Kediri36. Malang37. Probolinggo38. Madiun39. Surabaya40. Denpasar41. Mataram42. Bima43. Maumere44. Kupang45. Pontianak46. Singkawang47. Sampit48. Palangka Raya49. Banjarmasin50. Balikpapan51. Samarinda
Table 8
Inflation Rate Contribution in 44 Cities
(Percent)1)
C i t i e s
Monetary Policy Report - Quarter III-2008
40
Notes :
1) Index quarterly changes.
CPI Calculated based on 2002 prices (2002 = 100).
* Started in 1 Juli 2008, CPI Calculated based on 2007 prices (2007 = 100) with total 66 cities, quarter II-2008 data is mtm inflation data (month to month) June 2008
Sources: BPS-Statistic Indonesia (processed)
Table 8
Inflation Rate Contribution in 44 Cities (cont.)
(Percent)1)
- - - - - - - - - 2.48 5.541.52 0.05 2.15 1.29 3.34 -0.43 3.45 3.46 1.04 3.63 3.022.54 2.92 1.23 1.74 0.60 1.87 1.60 3.84 1.49 2.44 5.01
- - - - - - - - - 6.26 3.622.79 2.01 1.58 0.66 2.28 0.51 3.38 -0.54 4.45 3.39 -
- - - - - - - - - 2.76 4.21- - - - - - - - - 3.15 3.50
1.93 3.12 2.29 2.97 1.94 2.20 0.15 2.94 2.91 6.49 3.302.56 -0.99 2.34 3.48 -1.24 0.46 3.22 4.51 -0.04 2.59 4.01
- - - - - - - - - 3.04 5.860.96 3.00 -0.47 1.25 1.77 0.51 2.38 1.07 2.92 1.76 5.062.54 -0.04 0.82 1.72 2.39 2.06 0.44 5.21 4.71 1.17 4.30
- - - - - - - - - 5.78 8.31- - - - - - - - - 5.72 7.29
2.85 2.47 1.57 2.31 4.93 0.15 0.52 4.45 6.49 5.86 2.88
1.981.981.981.981.98 0.870.870.870.870.87 1.161.161.161.161.16 2.442.442.442.442.44 1.911.911.911.911.91 0.170.170.170.170.17 2.282.282.282.282.28 2.092.092.092.092.09 3.413.413.413.413.41 2.462.462.462.462.46 2.462.462.462.462.46
2006 2007 2008
I II III IV I II III IV I II* IIIC i t i e s
52. Tarakan53. Manado54. P a l u55. Watampone56. Makassar57. Parepare58. Palopo59. Kendari60. Gorontalo61. Mamuju62. Ambon63. Ternate64. Manokwari65. Sorong66. Jayapura
NASIONALNASIONALNASIONALNASIONALNASIONAL
Statistics
41
Notes :1) Index quarterly changes.
Wholesale Price Index (WPI) calculated based on 2002 prices (2002 = 100).*) August 2008Sources : BPS-Statistic (processed)
-1.27 0.68 1.62 3.34 2.92 0.23 10.75 1.75
-0.34 0.59 0.02 -6.04 -8.54 -4.12 -20.17 -3.12
0.62 -3.34 0.12 2.31 3.66 2.57 7.08 1.28
2.54 0.77 1.10 3.01 2.57 0.86 7.72 1.97
1.26 9.77 1.18 3.10 3.91 2.90 6.75 2.35
3.20 1.55 2.34 6.67 7.32 2.26 21.16 4.37
-1.29 0.35 0.60 3.41 4.68 0.89 13.39 1.80
1.84 1.02 0.52 0.34 -1.48 2.42 -9.47 0.18
3.80 3.00 8.04 9.11 10.73 4.61 24.20 8.02
0.00 0.70 1.34 0.69 1.43 0.00 5.13 1.38
2.76 0.70 1.32 6.85 9.15 3.28 20.49 4.08
4.03 13.19 22.22 0.64 -3.87 2.38 -13.77 9.15
3.87 0.61 1.60 -0.64 -1.34 -4.65 3.29 -1.20
4.97 1.83 2.11 5.13 8.84 6.50 13.64 4.85
5.33 2.40 2.58 0.61 0.00 2.29 -3.60 2.31
6.74 3.51 1.51 1.82 -5.00 1.49 -16.18 0.56
6.32 3.39 3.47 3.57 2.63 3.68 1.49 3.93
2.97 1.64 3.35 5.75 7.05 2.84 14.63 4.32
7.69 1.61 3.70 3.26 1.80 -0.69 6.38 3.63
7.59 3.70 5.80 11.05 10.00 2.08 24.40 8.50
7.05 4.08 7.17 6.64 5.88 5.44 6.43 6.45
7.75 10.78 12.60 15.56 14.14 5.16 28.10 12.55
4.32 3.54 1.75 -4.62 -0.88 1.23 -3.30 0.38
2003
Qtr.I
Qtr.II
Qtr.III
Qtr.IV
2004
Qtr.I
Qtr.II
Qtr.III
Qtr.IV
2005
Qtr.I
Qtr.II
Qtr.III
Qtr.IV
2006
Qtr.I
Qtr.II
Qtr.III
Qtr.IV
2007
Qtr.I
Qtr.II
Qtr.III
Qtr.IV
2008
Qtr.I
Qtr.II
Qtr.III*
Table 9
Changes of Wholesale Price Index
(Percent) 1)
End of Agriculture Mining Industry Import Export General
Period Total Non oil/gas Oil/gas