As for most of the economies in the region, the first four months of 2019 were quite challenging for Indonesia. On the economic front, trade did not fare well. Exports contracted by -10% y/y in March after -11.8% in February. Imports decreased by -6.8% y/y (after -3.8%). However, domestic demand has remained robust (+9.1% y/y for retail sales in February). On the political front, presidential and legislative elections were held on 17 April. Official results are not yet available (likely to be released in May) but polls point to a reelection of incumbent President Joko Widodo (Jokowi). Going forward, business sentiment points to economic expansion in the near term (the manufacturing PMI went up to 51.2 points in March from 50.1 in February) driven by a rise in domestic activity. On the policy front, Jokowi’s government is envisaging a stimulus package to boost growth. We expect the Central Bank to loosen monetary policy by the end of this year with a -25bp interest rate cut.
