With Widodo’s confirmation, the economic future looks bright
Indonesia’s Constitutional Court finally decided to declare an electoral victory for incumbent President Joko Widodo and his running mate Ma’ruf Amien, in the wake of the contested April 17th presidential election. With that decision, Widodo will be allowed to continue leading the country for a second five-year term. This decision basically mimics events in 2014, when the Court likewise ruled in favor of a Widodo’s victory.
The ruling will certainly help Widodo – who is widely known as Jokowi – to govern more effectively. First, the outcome of the legislative election favored his camp, since Widodo’s coalition had already amassed more than 60% of the vote, vs. the opposition parties’ 22%. Meanwhile, two other political parties, which before the election had supported Widodo opponent Prabowo Subianto, now are making noises about leaning more toward the Widodo camp. That gives Widodo’s coalition a strong legislative majority. Second, the Indonesian police and military proved themselves very strong in taming the May 22nd-23rd riot, and have tamped down pressures from the old generals. In fact, the Indonesian police had the courage to detain a retired Army major general, in the past very vocal against Widodo’s government. This time, the general was detained because he was allegedly linked to a plan to kill four generals during the mass riots. Third, as this will be Widodo’s last term, he’ll have nothing to lose if he chooses to run a program that benefits the people, but to which there was resistance in the past. With the success of the infrastructure programs of the past five years, we can expect Widodo to continue this in a big way, as long as his program is within Indonesia’s fiscal capacity.
The Central Board of Statistics reported a considerable trade surplus for May, the month of Ramadan. May exports reached $14,741.8 million, up 12.42% from April. However, exports were down by 8.99% from the same period of 2018. Imports reached $14,534.2 million, down by 5.62% from April, and 17.71% lower than in the previous year. That left the trade surplus at $207.6 million for May, and the trade balance for the first five months of the year in deficit, by $2,141.7 million.
The latest Central Board of Statistics inflation report showed inflation at 0.68% for May, which put y/y inflation at 3.32%, in the lower part of the Central Bank’s target band. Such mild inflation, as well as the improving external balance, led the Central Bank, during its June monetary policy meeting, to decide to keep the benchmark interest rate at 6%. But the Bank chose to loosen banking system liquidity, by reducing the reserve requirement by 50 bp, to 6%.
Now read on...
Register to sample a report