Morning Briefing: Above Expectation Q2 GDP Growth Fuels Widodo’s Confidence

Photo: Privacy

JAKARTA (TheInsiderStories) – Good morning. The release of Indonesia’s gross domestic product (GDP) data was a surprise and one that may give President Joko Widodo more confidence ahead of his re-election bid next year.

The economy grew above expectation in the second quarter, at 5.27 percent on year, which is the fastest for the period since 2013. All sub-indicators showed the economy is stable and gaining a momentum.

Household consumption grew at faster pace, investment moved in the right trajectory and government spending were higher. Challenges come from the external environment.

As the economy is expanding, the need for imports capital and intermediary goods are higher. At the same time, trade war continues to escalate. There’s a high possibility that Indonesia could soon be directly affected by the trade war.

The U.S Administration has planned to reassess its trade partners to look for unjust practices, particularly those with big surpluses like Indonesia. A report also emerged that the U.S may impose sanctions on Indonesian goods worth US$350 million after wining a World Trade Organization case that ruled the country had applied import restrictions on food, plants and animal products.

The better-than-expected economic growth boosted the sentiment from the market. The Jakarta Composite Index gained 1.56 percent to end at 6,101 while the rupiah strengthened to 14,481 from 14,503 per U.S dollar.

The GDP data will certainly put into use by the supporters of Widodo. In a national gathering, president had urged his supporters “not to back down from a fight”. The message can be seen as an instruction to consolidate and take control of the public discourse, something that the opposition camp are trying to exploit through social media campaign.

Widodo also held more meetings with his party supporters although there were still mere rumors on his running mate for the 2019 Presidential Election. Any candidates must register to the election commission by Friday (10/08) at the latest.

A ruling announcement by the Constitutional Court on whether Vice President Jusuf Kalla is eligible to run for the office for the third time is one of the most anticipate event. As such, Widodo may pair with Kalla again in 2019.

The opposition camp also faces similar question. The search for Prabowo Subianto’s running mate is still ongoing and officials from his Gerindra Party had said the name will be announced on Friday, which is the registration deadline. Subianto, who already faces an uphill battle against Widodo’s strong popularity, has some tough decision to make.

Hope you have a profitable day.

TIS Intelligence Team, Email: