14 Feb 2023 | News & Feature

Weakening consumption: a cautionary tale for the Indonesian economy

  • Shifting expectations in the market pose a depreciation pressure for the IDR. However, this problem is not unique to Indonesia as a stronger USD would suppress the value of other currencies as well.
  • The resilient labour market, still-loose liquidity conditions, and the prospect of higher oil prices may strengthen the Fed’s conviction in delivering its “tighter-for-longer” policy outlook.
  • The IDR remains stable for now but the dwindling trade surplus and narrowing real yield spread between ID – US bonds would continue to test the Rupiah’s resiliency in periods ahead.