CLSA Indonesia Macro Upgrades

Our economist Tony Nafte revised upwards his forecasts for Indo GDP, rupiah exchange rates, and fiscal deficit.

Following the 1Q09 release, Tony upgrades his GDP forecast for Indonesia from 0.8% previously to 3.7% this year. For 2010, we expect stronger growth at 4%, from our previous 2% forecast.
We had previously forecast a deficit blowout above 4% of GDP but now think that the 2.5% target is achievable.
We now think that the current spot rate at Rp10,250/US$ (previously Rp14k) is a more appropriate forecast both for end-2009 and end-2010.