JAKARTA (TheInsiderStories) – Good morning. Trade is the main course for today’s menu.
The Statistics Indonesia will announce the country’s August trade data at 1100 local time today, which is expected to stay in a deficit due to a combination of falling rupiah and higher oil price. Moody’s Analytics expected Indonesia to record a trade deficit of US$1.09 billion in August, lower than $2.03 billion in July.
The trade statistics may also exhibit an impact from the escalating trade war between the United States (US) and China, in the form of higher imports from the latter.
Rising trade deficit is one of the main concern for the government as it struggles to contain Rupiah’s persistent weakening. The government has announced a policy measure to curb imports, particularly consumer goods and energy items, which Moody’s Analytics said may tilt Indonesia’ trade balance to a surplus in the coming months.
However, a key development for today will be the expected announcement by US President Donald Trump on additional tariffs on Chinese goods worth $200 billion. The world’s two largest economies had been engaging in tit-for-tat trade war, with trade worth $50 billion between the two had been charged with higher tariffs.
In return, China has promised to impose higher tariffs on US goods worth $60 billion if Trump decides to push ahead with the plan. Furthermore, the US billionaire President appeared to be undeterred with the escalating tariff war, which he initiated due to China’s alleged unfair trade practices, vowing another round of higher tariffs for Chinese goods worth $267 billion, which means effectively all of Chinese exports to the US will be subject to the restrictive measure.
Amid the ongoing trade war, Trade Ministers from G20 countries issued a joint statement calling for a reform at the World Trade Organization, though it failed to state the specifics on what kind of reform that the multilateral body would need.
Barring some unexpected results from the trade announcement, domestic financial market may see less pressure compared to last week due to disappointing economic data from the US.
US retail sales in August grew at the slowest pace in six months and below market consensus, while the US Producers Price Index unexpectedly fell in the month.
On Friday (14/09), the Rupiah fell to 14,835 per US$1 from 14,794 per US$1, while the Jakarta Composite Index rose 1.2 per cent to 5,931 with foreign investors net bought equity worth Rp270.7 billion.
Moving on to politics, Presidential candidates from both opposing camp used the weekend to meet their core supporters. The incumbent candidate, President Joko Widodo, met the semi-official supporter group ProJo and sent a message that could fire up his core supports to put up the ground works.
The opposition’s candidate, Prabowo Subianto, secured the official support from the firebrand cleric Rizieq Syihab, who is now in a self-imposed exiles after being caught in several possible criminal charges.
The opposition camp also found itself in an unwanted controversy for suggesting that one of the official presidential debates should be done fully in English. The suggestion is purely for political motives, targeting the already well-documented Widodo’s poor command of English, but received strong public backlash for showing little respect for the native tongue.
May you have a profitable day.
TIS Intelligence Team, Email: email@example.com