Monday, August 10, 2009

Indonesia Expands at Fastest Pace in Southeast Asia

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Indonesia continues to be a compelling story ... since we highlighted the country in May, we've seen a further 30% rally. [May 22, 2009: Indonesia: A Must Own Emerging Market] [Jul 9, 2009: Indonesia's Star Continues to Rise on Back of Yudhoyono's Re-election] Now with correlations at extreme levels I am not sure how much of this is Indonesia specific and how much is "green shoots" (especially of the Asian variety), but the underlying story remains positive.

Via Bloomberg
  • Indonesia’s economy expanded 4 percent in the second quarter, the fastest pace in Southeast Asia, as low borrowing costs and the re-election of President Susilo Bambang Yudhoyono buoyed consumer spending.
  • Gains in services, construction and manufacturing helped Indonesia’s $513 billion economy resist the global recession and the threat of terrorist attacks such as those that killed nine people in Jakarta last month. Domestic demand and foreign investors drove the rupiah 12 percent higher this year, the most of any Asian currency, and the Jakarta Composite index is the region’s second-best performing.
  • Consumption grew 4.8 percent in the quarter, the statistics agency said. Government spending rose 17 percent, while the services sector growth accelerated 7.4 percent.
  • Lending by Indonesian commercial banks rose to 1,339 trillion rupiah ($135.25 billion) in May from 1,325 trillion rupiah in early January, according to the latest available data from the central bank.
So while as in China government spending has shot up, unlike China it's not a massive outbreak of bank loans driving growth. Indonesia is much more reliant on internal consumption growth and due to a relative lack of exports the country has been a relative island on its own... ironic considering the geographic landscape.
  • The government plans to unveil policy measures to spur investment and improve infrastructure within the first 100 days of the next administration taking office, he said. Yudhoyono’s second five-year term begins Oct. 20.
  • Income for Indonesian plantation farmers jumped 5.2 percent in the six months from December to June, according to an index compiled by the statistics bureau.
  • Car sales jumped 10 percent to 109,989 units in the three months to June 30 from 100,263 in the first quarter, according to the Indonesian Automotive Industries Association.
Peers in Southeast Asia...
  • Indonesia’s second-quarter growth is the fastest in the region followed by Vietnam, which expanded 3.9 percent in the same period. Singapore’s economy contracted 3.7 percent and Thailand’s central bank forecasts its GDP shrank 5.4 percent in the second quarter.
As always take the absolute number with grains of salt as they are government reports; but directionally it should make sense.

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