S&P Ratings: Indonesian Developers Potentially to Downgrade This Year

JAKARTA (TheInsiderStories) – S&P Global Rating rated Indonesia’s economic growth in 2019 will not far from the 5 percent. The reasoned, a number of risks has the potential to influence the Indonesian economy in the upcoming presidential elections.

Vincent Conti, the Economist of Asia Pacific S&P Global, said there are several supporting factors that influence economic growth in 2019, which is increasing of government spending, public spending and demographic bonuses.

However, there are several factors that could hinder the economic growth in 2019, such as the removal of price controls, tight monetary policy and uncertainty over economic conditions after the presidential election.

“The government will also pay attention to the current account deficit and pressure on the currency market next year,” Conti said as quoted from written statements today (11/22).

Furthermore, Sovereign and International Public Finance Ratings S&P Global Rating Andrew Wood explained, Indonesia has a higher debt level than other Asian countries. As a result, this affects the level of Indonesia’s balance of payments deficit.

“However, Indonesia is still better than other fragile five countries such as Turkey, Qatar, Pakistan, Egypt and Argentina,” he said.

Wood also stressed that Indonesia should not be too lulled by the current political frenzy, but pay more attention to its impact on broader price, subsidy and fiscal policies.

Corporate Ratings S&P Xavier Jean added, there are several sectors that are potentially affected by the 2019′ presidential election. The real estate sector is the sector that can be exposed to the highest risk. Moreover, the condition of this sector was exacerbated by the growth in supply from low-cost housing projects.

Other sectors that have potential affected are the energy and power sectors amid the electricity and fuel price controlled by the government, and also how the state-owned PT Perusahaan Listrik Negara anticipates the problems in its companies.

The other sector is the infrastructure sector due to tariff adjustments to support the period before the presidential election and the risk of execution in infrastructure projects.

“The risk of Rupiah depreciation also affects the real estate, manufacturing and airlines sectors, but the risk of mismatch due to this currency is still manageable, especially in open companies,” he said.

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