Indonesia's trade balance for November posted a small deficit of USD0.3bn as a result of poor performance of export. The non-oil manufactured exports reduced sharply and caused the overall exports to fall by 17.58%. The manufacturing goods pull down the headline growth rate by 8.6pp and mining by 5.4pp. On the other hand, imports of the economy reduced by 18.03%.
Marginally improve in capital goods import and steady cement sales indicate that the consumption and processing activity in the economy are slowly recovering. The economic outlook of Indonesia is expected to improve in Q4, 2015 and continue in 2016 as well.
"We expect BI to remain on hold at the December meeting to avoid potential volatility in the bond and currency markets - around the FOMC meeting. Amid a gradual recovery in domestic demand, lower inflation and reduced uncertainty around the timing of the Fed action, we believe there is room for BI to deliver two 25bp rate cuts next year, one in Q1 and another in Q2", says Barclays in a research note.
