Based on market consensus reported by Bloomberg, the economy in the third quarter will grow 4.8% compared to 4.67% in the previous quarter. While Bank Indonesia itself has a more optimistic predictions that grew up to 4.85% yoy fueled by increasing government investment.
Jokowi on Monday declared that government spending has reached 70% of the budget, or more than doubled from the end of June. The high market expectations for economic recovery in the third quarter made the rupiah strengthened to the level of USD 13 435 per US dollar yesterday.
But we see if the GDP growth in the third quarter declined below market expectations, the room for cuts in the BI rate was more open. Yesterday, Nasution, the Coordinating Minister for Economic Affairs and former central bank governor also said that there is room for a rate cut following the improvement of the balance of payments that is driven by the narrowing of the current account deficit.
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