1. The Covid-19 outbreak in Indonesia doesn’t seem like it will end any time soon
2. Last year Covid-19 outbreak has a devastating impact on Indonesia’s economy
3. Large contributing sectors such as manufacture & trade dragged down Indonesia’s economic output but the digital economy rose by double digits
4. The second wave outbreak strikes overwhelming healthcare system & forcing gov’t to impose stricter measures recently
1. Downside risk outweigh recovery momentum, primarily due to stricter social restriction imposed by gov’t
2. Additional fiscal aid to soften the blow on the economy due to pandemic curb related measures
3. The success to cushion the economic pressures depend on how fast & effective gov’t get the budget realized
4. While BI has no room for rate cut, easy policy will remain in place
5. Although liquidity remained ample & supported by strong capital, Indonesia banking system remained risk averse
6. Credit interest rates drop still lagged behind central bank benchmark rate anticipating potential rise on NPL with high LaR
1. The future path of interest rates may haunting Indonesia, but we don’t expect this time won’t be like 2013
2. We expect tapering off will start to kick off in 1Q21, but should we really need to worry? Let’s take a closer look! First on rupiah
3. Now on Indo GB, still attractive valuation compared to DM and EM
4. Indo GB has Attractive yield with investment grade rating reaffirmed
1. Although lag behind its peers on the first half, Indonesia equity market offered lucrative valuation
2. It is not only about portfolio inflow, with bold policy reform we expect will attract both domestic and foreign direct investment
3. The key challenge is to bring back budget deficit below 3% in 2023, fiscal consolidation is needed but facing challenge due to surging Covid-19
4. However we are cautiously optimistic on Indonesia’s economy
