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Jakarta Composite Index: Trying to lift off

Going into 2016, we highlight our macro and market summary as follows:
·    We expect CAD at 1.86% of GDP in 3Q15, likely to rise to 2% in 2015 and 2.3% in 2016 on higher imports as the economy picks up, leading to slightly weaker 2016 exchange rate of IDR14.5k/1USD.
·    On CPO, we estimate 2015 inflation of around 3% to remain manageable at below the 4% level in 2016, and could fall to the 3.7% level assuming 10% lower fuel prices.
·    For BI policy rate, we expect a 25bps rate cut in 1Q16 for a total decline of 75bps to 6.75% for 2016, which would be one of the biggest rate cuts in the region in 2016.
·    2015 GDP growth of 4.72% should rise to 5.1% in 2016, which would be one of the highest globally.

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