The deficits “will definitely pressure the rupiah, but we believe it is manageable”, said central bank chief Darmin Nasution. The government has estimated a current account deficit for October-December equal to 2.3 percent of gross domestic product. In the third quarter, the current account deficit was $5.3 billion. It weakened about 6 percent against the dollar in 2012, making it the worst-performing emerging Asian currency last year. This year’s trade deficits have fuelled current account deficits, which have hurt the rupiah. That narrowed in November, but rising imports and falling exports produced a $1.33 billion deficit in the first 11 months compared with a $25.4 billion surplus a year earlier. MIND THE GAPĪ decade-long commodity boom created a burgeoning Indonesian middle class looking for imported goods and services such as cosmetics, cars and credit.įor years until 2012, Indonesia didn’t have a monthly trade deficit, but there were six between April and November, including a record $1.54 billion in October. “If the market corrects, we think it could be a very good buying opportunity,” said Soo Hai Lim, fund manager at Baring ASEAN Frontiers Fund, which had about a fourth of $534 million assets in Indonesia at end-November. Local investors poured a net $416 million into equity funds in November. While 2012 saw overall net foreign inflows into Indonesian shares, there was a cumulative net outflow of $352 million in offshore equity mutual funds investing in the country last year, according to data from Lipper, a Thomson Reuters company.įor sure, some remain bullish on Indonesia, whose benchmark hit a record highs on Thursday and Friday. We might see foreign outflows for a while,” said Jemmy Paul, head of equities at Jakarta-based Sucorinvest Asset Management, which manages about $280 million. “We see foreign interest in Indonesia subsiding, especially in the second half of 2013. It jumped 87 percent in 2009 and 46 percent in 2010.) (In 2012, the benchmark index gained 13 percent. In late 2012, some foreign investors cashed in after years of gains to put their 2013 bets elsewhere. Throw in share prices that are high relative to earnings, forecasts for a pick-up in inflation in the new year and political uncertainty ahead of elections in 2014, and Indonesia has lost some shine. The domestic demand that shielded Southeast Asia’s largest economy from the global downturn and made it one of the world’s hottest emerging markets is part of the root of the problem, as imports are robust while commodity exports have faltered, creating worrying deficits. JAKARTA, Jan 7 (Reuters) - Indonesia’s benchmark index started 2013 with a record high, yet economic concerns could make fund investors turn away this year from a country that high domestic growth transformed into a popular safe haven during recent global turbulence.įor some foreign portfolio investors, the concern isn’t growth - Indonesia might again grow at least 6 percent - but a series of rare trade deficits and a shaky currency.
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