Indonesia's Foreign Capital Inflows US$6.3B in 1Q 2019
Governor of Bank Indonesia Perry Warjiyo. Photo by TheInsiderStories.

JAKARTA (TheInsiderStories)Bank Indonesia (BI) noted that foreign capital inflows worth of Rp74.4 trillion (US$6.3 billion) entering Indonesia in the first quarter (1Q) of 2019, from a year ago Rp13.9 trillion.

BI’ Governor Perry Warjiyo explained, Rp62.5 trillion of inflows went into State securities and Rp11.9 trillion put into shares.

“The high inflow shows the increasing of confidence of foreign investors in Indonesia,” Warjiyo said.

The increase in foreign capital flows was also caused by a decline in uncertainty in the global financial market so that risks in developing countries, including Indonesia, declined.

The latest Federal Reserves Fund Rate (FFR) tends to be more dovish or not aggressive in the last meeting. The same thing happened in other developed countries.

With the large foreign capital inflows coming in, he hopes will have a positive impact to maintain the exchange rate, increasing economic growth and also decreasing the current account deficit.

Warjiyo predicts that economic growth in the first quarter of 2019 will be at 5.2 percent or is still consistent with the target of 5.0-5.4 percent until the end of 2019. The contributors of economic growth are private consumption, government consumption and consumption of non-state institutions household.

The government will continue to carry out fiscal stimulus in the form of social assistance to encourage economic growth, especially to low income people. While in terms of investment, although it has slowed slightly compared to fourth quarter of 2018, investment growth is predicted to increase in subsequent quarters so that it can achieve a 5.2 percent economic growth rate.

While in terms of inflation, BI estimates that inflation in March 2019 will be at 0.1 percent or 2.47 percent on an annual basis. The 2.47 percent annual inflation shows that the inflation rate has been decreasing since the beginning of 2019, namely 2.58 percent in January 2019 and 2.57 percent in February 2019.

According to him, all commodity prices show low inflation. Although, there are several commodities such as shallots, garlic, air freight rates, cayenne pepper, and bottled water, which recorded increases. But for other commodities such as chicken meat, eggs, vegetables, rice still shows deflation. With these developments, it is optimistic that the end of the year will be able to record an inflation rate below 3.5 percent.

US$1: Rp14,100

Written by Staff Editor, Email: theinsiderstories@gmail.com