• Economic Update

    • economic update
    • economicupdate
      • August-2021: Tapering (Without) Tantrum
        In response to the economic impact of the Covid-19 pandemic, the Federal Reserve cut short-term interest rates to zero on March 15, 2020 and restarted its large-scale asset purchases (more commonly known as quantitative easing or QE. Since July 2021, the Fed has been buying $80 billion of Treasury securities and $40 billion of agency mortgage-backed securities (MBS) each month. As the economy rebounded in mid-2021, Fed officials began talking about slowing—or tapering—the pace of its bond purchases. In the previous tapering in 2013, it created a tantrum, which adversely affected not only the US capital market but also the global market including Indonesia. Therefore, the financial markets, most notably the emerging markets, including Indonesia, have been anticipating the likely impact of the forthcoming tapering. Will it lead to another tantrum or is this time different? More detail ...
      • June-2021: Lets Prepare For The Fed’s “Normalization”
        PEFINDO is of the view that the monetary stance of the central banks will turn tighter in line with the statement of the Fed that it will soon increase their benchmark interest rate (Fed Funds Rate – FFR) to 1% until 2023. Until June 18, 2021 (ytd), at least 34 tight monetary policies have been carried out compared to 25 times which were easing policies. Domestically, although Bank Indonesia still maintains interest rates low at 3.5% and still chooses accommodative monetary policy in line with domestic’s low inflation, but it will be very interesting to see how Bank Indonesia will respond to the policy direction taken by the Fed in next two years. More detail ...
      • April-2021: Time to Leap in Second Quarter 2021!
        PEFINDO is of the view that the business activities and import activities will lead to an economic improvement in the second quarter of 2021. Two main indicators sourced from the Bank Indonesia’s Business Activity Survey (Survei Kegiatan Dunia Usaha) show all sectors recorded positive numbers in the next quarter and the import of Raw and Auxulary materials (Bahan Baku dan Penolong) recorded a hike of 31.80% month-to-month (mtm) or 25.82% year-on-year (YoY) in March 2021. Despite these improvements, the pace of Indonesia’s economic recovery still lagged behind the three biggest economies in the world, namely China, the US, dan Japan. Yet, we believe the expansion will accelerate in the second quarter and the rest of the year. More detail ...
      • February-2021: Waiting For The Recovery Signal
        PEFINDO is of the view that Indonesia has struggled to find a clear path out of an economic recession after experiencing the first annual contraction since the 1998 Asian financial crisis. In response, the government has stepped up public spending to a record high, resulting in rapid growth in sovereign debt. At the same time, however, the hoped-for swoosh-shaped economic-recovery did not materialize as private consumption failed to be the driver for growth in the fourth quarter leading to a contraction of 0.42% (quarter-to-quarter/qtq). More detail ...
      • December-2020: Probability of Yield in 2021: How Low Can You Go?
        PEFINDO is of the view that the success in vaccination program and the sound fundamental of domestic economy, in addition to the global push factor hopefully will have a positive impact on Indonesia’s financial market, hence improving Indonesia’s sovereign yield. The accommodative stance of the central bank (Bank Indonesia – BI) will lead to reopening of widespread business activity and the fiscal stimuli will spur demand of the low and middle level. In the meantime, the sell-off behavior in the global safe-haven asset is expected to drive a resurgence of foreign capital inflows to domestic financial markets. More detail ...
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