DEPOK (eNBe Indonesia) - The Central Statistics Bureau (BPS) reported on Wednesday (March 1) that the annual inflation rate increased to 5.47% in February of 2023 from 5.28% in previous month, with prices of food, and beverages rising the most in five months ahead of the holy month of Ramadan.
Tourism industry, meanwhile, recovered well with 503% jump in arrivals of foreign tourists.
Core inflation slowed to 3.09% in February from 3.27% in January. On a monthly basis, consumer prices were up 0.16% in February, following a 0.34% rise in January, mainly driven by a decrease in core and volatile food inflation.
With these developments, annual CPI inflation remained under control at 5.47% year on year (y/y). Central Bank (Bank Indonesia/BI) said it believes that core inflation will remain within the range of 3.0 ± 1% in the first half (H1) of 2023 and CPI inflation will return to the target of 3.0 ± 1% in H2.
Rupiah. The inflation development also supported the local currency. The Rupiah was maintained at Rp15,250 against the US Dollar on Wednesday, thus supporting Economic stability.
The stronger Rupiah is in response to foreign capital inflows to domestic financial markets given the positive perception of investors concerning the promising domestic Economic outlook, accompanied by maintained stability, attractive yields on domestic financial assets for investment and less global financial market uncertainty.
BI expects Rupiah to appreciate in line with the promising Economic outlook and strong Economic fundamentals, thus edging down inflation further.
Rupiah stabilization policy to control imported inflation will be strengthened with foreign exchange proceeds of exports management through the implementation of foreign currency term deposit (TD) instruments using foreign exchange proceeds of exports (DHE) in accordance with market mechanisms.
tourist ARRIVALS. BPS also reported that foreign tourist arrivals jumped 503.3% y/y to 736.000 in January 2023, as the economy fully reopened from COVID restrictions.
The number of arrivals by air in Bali, the center of the Indonesian tourism industry, rose to 330,000 from zero in January 2022.
Also, tourists reaching Jakarta jumped 721.4% to 14.100. The number of arrivals by ship in Batam soared to 240. Tourists from Malaysia soared by 120.3%.
In 2022, tourist arrivals surged 251.3% to 5.47 million, exceeding the government’s target of 3.6 million visitors, buoyed by a recovery in global travel. Government has set a target of more than 7 million visitors this year.
TRADE SURPLUS. Minister of Trade Zulkifli Hasan said throughout 2022, Indonesia’s trade balance recorded a surplus of US$54.53 billion, making it the largest surplus in history. The trade balance surplus came from Indonesia’s rapid exports to several countries.
Indonesia’s exports were no longer dominated by western countries. There has been an expansion of the export market over the past few years.
At least three trading partner countries contributing to the 2022 non-oil and gas trade surplus–US, India and Philippines. US contributed a surplus of US$18.89 billion, India US$16.16 billion, and Philippines US$11.41 billion.
Exports contributed greatly to the trade surplus where the contribution reached 24.49%, with a total value of US$291.98 billion. Meanwhile, Indonesia’s total imports were recorded at US$237.45 billion, so that total trade in 2022 would reach US$529.43 billion.
MANUFACTURING. Tradingeconomics.com reported that the S&P Global Indonesia Manufacturing PMI inched down to 51.2 in February 2023 from January’s three-month high of 51.3, pointing to the 18th consecutive period of growth, as output grew to the fastest pace since last September.
While the Ministry of Industry reported that the industrial confidence index improved to 52.32 in February 2023, at its expansive state, mainly for new orders, production, and inventory.
There were 16 sub-sectors that were at an expansive level, while 7 other sub-sectors were still at a contractionary level or experiencing a decline.
Looking good. The State Budget also enjoyed a relatively strong first two months of the year to ensure expansion of capital expenditures, including financing the new capital city Nusantara and public infrastructure projects, particularly roads (including land acquisition for toll roads), dam, and railways.***
