The country's Investment Coordinating Board said yesterday that the realization of foreign and domestic investment rose a strong 55.8% YoY to IDR 50.8trn in 2Q10, up from 24.6% in 1Q. Growth was led by investment from domestic companies particularly in the sectors of food, mining and transportation & telecommunications according to the officialstatement.
Meanwhile, data released earlier this month revealed that domestic consumption growth also held up well in 2Q. Motorcycle sales and motor vehicle sales increased 46.7% YoY and 78.3% respectively in the April-June period (vs. 35.4% and73.6% in 1Q), and consumer confidence index stayed in the expansionary territory for the fifth consecutive quarter (111.4 in June) on the back of upbeat outlook for income and general economic conditions. By contrast, export growth has
eased in 2Q probably due to the slowdown in global commodity prices and the cooling-off in global real economy.
Custom exports decelerated to 39.0% YoY in April-May from 54.3% in 1Q (the MoM growth was slightly negative in both April and May), and will likely slow further to around 35% in June (June trade data is on tap next Monday). Meanwhile, fiscal stimulus in the Indonesian economy has also been reduced. On the back of strong recovery in government revenue and austere government spending, the central government's fiscal balance registered a surplus of IDR 42trn in the Jan-Apr period.
The finance ministry said in a parliament hearing this week that fiscal deficit is likely to be 1.5% of GDP this year, better than the initial official forecast of 2.1% (closer to DBS forecast of 0.9%), and the finance minister expressed that the government may reduce the target for debt auctions this year.
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