Weekly Notes :
We see that recent domestic economic data release was supporting the idea of recovery momentum up until 1H21. However we should anticipate further deceleration or possibly a contraction ahead, primarily due to the prolonged emergency public activity restriction as Indonesia has become the epicenter of Covid-19 pandemic.
Improving Business Activity
Domestic business activities continue to improve in 2Q21 as indicated in Bank Indonesia survey. Nealy all indicators for business activities strengthened : 1) increasing production capacity utilization; 2) improving business financial condition and access to credit as well as 3) better labor absorption.
Trade Surplus Continued
Indonesia’s trade balance recorded a surplus of USD1.32 bn in June-21, lower than consensus and our estimate (USD2.24 bn vs USD2.09 bn). Exports grew 54.5%YoY to USD18.55 bn and imports rose 60.1%YoY to USD17.23 bn.
Decelerating Foreign Debt
There was a deceleration of Indonesia external debt in May-21. Total external debt grew 3.1%YoY to USD415 bn. The growth was lower than in the previous month of 4.9% YoY. Slowing growth of external debt was driven by government debt payment as well as lower growth in private sector.
Auto Demand Gradual Recovery
Domestic car wholesale and motorcycle distribution figures jumped to 476.1% YoY and 155.1% YoY in June-21 on the back of : 1) low based effect phenomenon; 2) pent up demand as well as accommodative policy through tax relaxation and macroprudential easing.
Expecting Loan Disbursement to Improve in 2Q21
Recent survey conducted by Bank Indonesia indicating demand and supply for new loan disbursement in 2Q21 and June-21 has signaled and acceleration as reflected by weighted net balance of 68.1% for new loans disbursement.
Downside Risk Escalates
Covid-19 cases in Indonesia continue to surge exceeding our modelling dynamic which indicate domestic outbreak condition could be potentially worse than India. Considering the impact of prolonged PPKM Darurat we downgraded our FY21 GDP growth projection to 3.76% YoY from 4.01- 4.18% YoY previously.
Digital Economy in Time of Crisis
We expect Indonesia’s digital economy to accelerate by 25% driven by increasing E-commerce GMV of 40% this year.
Bukalapak : Much Awaited IPO Debut
Bukalapak has contributed nearly 16.7% of Indonesia’s digital economy in 2020. We expect Bukalapak IPO success story will be the benchmark for other domestic Tech Giants aiming to be listed in domestic capital market. The implied IDXTechno market cap weight to JCI market cap will be more than 5% post-Bukalapak IPO.
Disclaimer On
