Report Published: "Indonesia Country Risk Report Q3 2015"

Core Views

* We have downgraded Indonesia's real GD P growth forecast in 2015 to 5.3% (from 5.5 % previously), as we note that tight monetary policy and the weak rupiah are likely to keep a lid on private consumption throughout the year. That said, this rate still implies an acceleration from 2014's 5.0 rate of growth.
* The government's subsidy savings, which are estimated at approximately USD18.2bn in 2015, will be channeled towards infrastructure investment as well as direct fiscal transfers for the poor. This should have a stimulative effect on economic growth in 2015, and represents a significantly more efficient spending programme going forward.

Major Forecast Changes

* We have downgraded our 2015 end-year forecast for the Indonesian rupiah to IDR13,700 /USD from IDR13,000 /USD previously owing to broad US dollar strength. In particular, we note that it will be difficult for the rupiah to recover from current levels even as the country's fundamentals improve, as Indonesia remains highly vulnerable to external shocks owing to its large net international investment deficit.
* While President Joko 'Jokowi' Widodo scored a massive victory in eradicating petrol subsidies earlier this year, the government may struggle to meet its fiscal deficit target of 1.9% of GDP in 2015 as oil and gas related revenues shrink. As such, we have downgraded our fiscal deficit target to 2.4% of GDP, from 1.9% previously.

Full Report Details at
- http://www.fastmr.com/prod/987524_indonesia_country_risk_report.aspx?afid=301

Key Risks To Outlook

* Indonesia risks a return to the more polarised political environment witnessed before outgoing President Susilo Bambang Yudhoyono took office in the mid-2000s.
* Indonesia's poor net international investment position, along with a current account deficit, make it vulnerable to periods of acute risk aversion in the global economy. In an environment of rising global interest rates, this is an increasing risk.

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The Indonesia Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Indonesia. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Indonesia's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI Research.

Key Uses

* Forecast the pace and stability of Indonesia's economic and industry growth through end-2019.
* Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
* Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
* Contextualise Indonesia's country risks against regional peers using BMI's country comparative Risk Index system.

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