Indonesia: GDP to grow around 5% in 2020 – UOB

Indonesia’s economic activity is expected to expand at around 5% (or below) during this year, suggested Strategists at UOB Group’s Quarterly Global Outlook.

Key Quotes

“The year of 2020 will be more challenging for Indonesia, given the possibility of slower economic growth due to the global outbreak of COVID-19. We estimate domestic economic growth to slow below 5.0% (down from our previous outlook of 5.2%), pricing in a negative COVID-19 impact of around -0.3ppts to -0.7ppts on GDP growth”.

“With the COVID-19 likely to limit the country’s economic activity, both loans and deposits (notably at the beginning of the year) will less likely to record higher growth rates. At best, they may remain stable or otherwise turn lower. The loan expansion is expected to be supported by large banks (Book 4) due to more manageable credit risk. BI expects credit growth to be in the range of 6.0%-8.0% for 2020, significantly down from 9.0%-11.0% previously, while third-party deposit growth is likely to be around

6.0%-8.0%.”

“On liquidity front, the recent market volatility arising from global uncertainties and flight-to-safety activities will have an impact on liquidity in the banking system, especially foreign exchange liquidity.”