Indonesian real GDP expanded by an estimated 4.8% y/y in 2015. The main key
drivers behind the lower growth were prolonged delays in government spending,
sluggish private investment and the impact of weak global markets. Indonesia
also recorded a current account deficit equivalent to 2.2% of GDP in the third
quarter of 2015. Moreover, manufacturing activity remained in negative territory
and exports were contracted in the previous year.
According to the fresh
estimates from Scotia bank, "Inflation will likely hover near 5% y/y in 2016
-17, as a gradual recovery in commodity prices and a weakening rupiah maintain
some pressure on prices. Moreover, it expects another 25 bps interest rate cut
around mid-year. In addition economic growth will accelerate slightly to an
average of 5.2% in 2016-17."