A Small Deflation, a Lower Trade Deficit - Bank Danamon | Outlook Data
(Insider Stories) - With Indonesia’s recent high inflation looking set to be tamer after supply disruptions have eased for food products like onions and garlic and global gold prices have cooled, markets will have their eye on consumer price index and trade data due for release May 1.
The following is some analysis on what the numbers may look like from leading Indonesian lender PT Bank Danamon (BDMN):
Indonesia Economic Briefing
A small deflation, a lower trade deficit
April 29, 2013
By Dian Ayu Yustina, Anton Hendranata & Anton H. Gunawan
April -13 Inflation Forecast
· April inflation numbers will be released this coming Wednesday (May 1). We expect to see a significant decline in the inflation rate from 0.63%mom in Mar-13 to -0.06%mom. It will thus lead to a moderately lower year on year inflation at 5.62% from 5.90% in Mar-13, due to a high base effect, i.e. 0.21%mom inflation in Apr-12.
· The pressure of some raw food prices (particularly rice) may be lower as we are currently in the harvesting season. The price of eggs, chicken, and chili may have also declined compared to the previous month. Onion and garlic prices, the main culprit of the inflation last month, have generally gone back to normal after the distribution problem.
· The monthly core inflation rate (excl. volatile food and administered price) may increase slightly to 0.17%mom in April compared to 0.13%mom in the previous month. The year on year core inflation may reach 4.15%, slightly lower compared to 4.21% in March. The low pressure on the core inflation is partly due to the significant decline of the world gold price, despite the slight depreciation of the Rupiah this month.
March -13 International Trade Forecast
· On the same day, the statistics office will also release the March’s international trade data. Export may register a year on year decline as global economic recovery stalled and commodity prices declined further. The large decline was also a factor of a high base effect. However deficit could slightly improved as imports are also declining.
· Export to China and other Asian countries improved slightly in the month of March though demand from the advanced countries may still be depressed. Downside mainly comes from the commodity prices that continued to decline in March, brought down by the downward expectation of the global economic recovery. CPO and most of the mining commodity prices (i.e. coal, copper, tin and nickel) decline in March. Oil price also recorded a sharp decline, Brent crude price in March declined by 6% and reached US$109 per barrel
· Imports may contract further as pressure on oil imports moderate with the declining global oil price. The soon to be announced fuel subsidy reduction policy may also bring small impact to rein in the oil imports. Meanwhile, non oil and gas imports will stay high, as reflected in the relatively strong FDI data (1Q13). However we still expect a declining growth pace of imports particularly on the consumption goods as import regulations tightened and efforts are being made to support the import substitution industries.
