Ø In June 2009, CPI inflation was only 0.11% mom or 3.65% yoy, far below the historical levels. Inflationary pressure from rising international market prices for some food commodities could be offset by the appreciation of the rupiah and persistent slack in domestic demand.
Ø The improving trend in the global economy had a positive impact on Indonesia’s economic performance in Q2/2009. Improvement in trading partner economies has led to improvement in Indonesia exports, with the current account posting a USD2.2 billion surplus.
Ø The rupiah exchange rate underwent 9.90% appreciation during Q2/2009. The continued positive condition of economic fundamentals, orderly and peaceful national election and positive sentiment in the global economy have boosted capital inflow to the domestic market. Positive capital inflows alongside with the improvement in exports resulted in a positive contribution to the balance of payment. As of June 2009, the international reserves stood at USD57.6 billion.
Ø The Indonesian central bank Bank Indonesia has lowered again the benchmark interest rate by 25 bsp to 6.75%. This cut rate is expected to pave the way for accelerated credit expansion amid well subdued conditions of macro stability.
Ø In the financial sector, the stability of the national banking system held firm with a substantially high CAR at 17.3% and NPLs within safe limits at below 5%. Liquidity in the banking system, including the interbank money market, has progressively improved alongside growth in depositor funds.
Ø The Japan Credit Rating Agency (JCR) has increased the rating of Indonesian long term foreign currency debt from BB to BB+, and the rating of Indonesian Rupiah long term debt from BB+ to BBB- with stable outlook for both ratings.
Ø The Indonesian Investment Board BKPM projected that the investment activities in Indonesia will grow 9,7% or reach US$19 billion by the end of 2009 and 27% in 2010.
