Indonesian retail sales grew by 1.1 percent in August - Photo: Special

JAKARTA (TheInsiderStories) – Indonesian retail sales grew by 2.4 percent in July, increase from the previous month which recorded of -1.8 percent (YoY). This proven by the Real Sales Index of the Bank Indonesia (BI), today (09/10). The increase was mainly driven by retail sales of the parts and accessories group, and the food, beverage, and tobacco group.

Retail sales are predicted to grow higher in August, the central bank said. This is indicated by the forecast for retail sales growth in August, which increased to 3.7 percent (YoY), supported by increased sales of the parts and accessories group.

In addition, sales of the food, beverage and tobacco group and the information and communication equipment group also improved in line with seasonal factors such as the rise of promotions and sales discounts welcoming the celebration of independence day.

The survey results also indicated that upward pressure on prices at retail traders in the next six months (January 2020) is expected to decline. This is reflected in the upcoming six-month general price expectation index of 161.1, lower than the index in the previous month of 162.5.

The retail sales index is one of the indicators to measure 7 days reverse repo rate (BI-7DRR). Meanwhile, BI had cut BI 7DRR by 25 bps to 5.5 percent. Deposit facility and lending facility rates also dropped by 25 bps to 4.75 percent and 6.25 percent, respectively.

BI’ Governor Perry Warjiyo said the decision has been taking to give a stimulus for the banking industry. He continued, the policy was in line with low inflation forecast and improving investment returns on domestic financial assets.

Its expected these indicator as a first step to boost the economic growth from the impact of the global economic slowdown. Currently, central banks in the emerging market lowered their benchmark interest rates to boost economic growth.

Warjiyo revealed, from the domestic side, the inflation rate is expected at the BI’ target of 3.5 percent by the end of this year. In 2020, inflation will be at 3 percent plus-minus 1 percent.

He projected that the Indonesian economy in 2019 will be below the midpoint of the 5 to 5.4 percent and in the range of 5.1 – 5.5 percent in 2020. Its expected besides government and public spending, investment and export become the engine of growth.

The governor also sees the Current Account Deficit (CAD) will be in the range of 2.5 percent and 3 percent of GDP in 2019 and 2020. Warjiyo revealed BI will strengthen the external resiliency to attract foreign investment to lowering the CAD in the range of government’ target.

In June, the loan growth was slow down to 9.9 percent from 11.1 percent in May. But he optimistic the loan growth still have a chance to grow the range of 10 – 12 percent in 2019 and 11 – 13 percent in 2020.

Warjiyo stated BI will use macro-prudential policies to encourage bank lending and expand the financing for the economy. Payment system policies and financial market deepening are also continuously strengthened to support economic growth.

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