Indonesia: Ahok comes back into the picture
Ahok (the nickname of Basuki Tjahaja Purnama, the former governor of Jakarta Metropolitan) was just recently promoted as the Chairman of the Board of Pertamina, the Indonesian state-owned oil company, literally the largest company in Indonesia. This was a very high-profile promotion by the government.
Prior to the official announcement, the speculation as well as noise from the opposition was high when Ahok was called by the Minister of State Enterprises. The new minister, Erick Thohir, is known as a successful entrepreneur and also for his integrity. He was responsible for the success of the Asian Games in Jakarta 2018. He was also the chairman of the campaign organization for the recent presidential election. Therefore, people quickly understood that this promotion was initiated by President Jokowi himself, demonstrating the political strength and the determination of the president.
Meanwhile, the Indonesian economy itself is in good shape. The Central Board of Statistics just released the National Accounts data, which showed that in Q3 2019, the Indonesian economy grew by 5.02%. It is true that the rate of growth was slightly lower than that of the previous quarter. However, given the global economic environment, this rate of growth seems encouraging.
The growth of the economy took place alongside an improving external balance. The Indonesian current account improved considerably in Q3 2019 compared to the previous quarter. In Q2 2019, the deficit of the current account reached 2.93% of GDP, while in Q3, the current account deficit declined to 2.66% of GDP. While the financial and capital account in the balance of payments only recorded a small surplus, the overall balance of payments reported a deficit of around $46 million, leading the foreign exchange reserves of the Central Bank to decline to $124.3 billion at the end of September 2019. However, the foreign exchange reserves of Bank Indonesia reversed to increase to $126.9 billion in October 2019.
The Central Board of Statistics also released the balance of trade data for the month of October 2019. Exports increased by 5.92% month over month and reached $14.933.8 million in October 2019, while imports only increased by 3.57% and reached $14,772.5 million, resulting in a trade surplus of $161.3 million.
The Central Board of Statistics also released the inflation report, which showed relatively mild inflation for the month of October 2019, at 0.02%. With that performance, year-over-year inflation stood at 3.13%, a level at the lower part of the target corridor of the Central Bank. To maintain growth momentum and to reduce the rate of volatility in the foreign exchange rate, after four rate reductions in a row, the Central Bank decided to keep the benchmark interest rate at 5.00%.
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