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Jakarta Post

Why we remain positive on Indonesia's economy

  • Deyi Tan

    The writer is ASEAN, Korea and Taiwan economist at Morgan Stanley

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Jakarta   /   Thu, March 15, 2018   /  03:08 pm
Why we remain positive on Indonesia's economy We expect the global economy to be stronger for longer, which should be conducive to the external environment helping sustain Indonesia’s export momentum. (Shutterstock/File)

The United States’ long yields have been rising as markets begin to anticipate four rate hikes by the Federal Reserve this year. Correspondingly, Indonesia has seen its 10year bond yields increase as foreign bondholders have sold off, and as the rupiah has underperformed in the region on a yearto-date basis, alongside the rupee and the Filipino peso. These recent developments have raised the question of how exposed Indonesia is to a repeat of 2013 taper tantrums. Overall, we have a constructive outlook on ASEAN, and are most positive on Indonesia. We believe a repeat of the 2013 taper tantrum is unlikely. Should there be an accelerated and sustained rise in US 10-year yields, we believe Indonesia would be relatively more exposed to volatility than the other ASEAN economies. That said, we think Indonesia’s improved macro fundamentals indicate that its economy is better posi...

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.