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Author: Agnes HT Samosir
CAD narrowed to 2.7% of GDP (against 2Q19 and 3Q18), but weaker than our/consensus expectation.
Overall BOP was negative amid weaker FDI (on qoq basis), against BI's early forecast.
Current account remained in line to achieve FY19 improvement of 2.8% (BI's expectation of 2.5-3% and FY18 achievement of 3%).
Weaker than expected CAD
Current account deficit (CAD) of 2.7% of GDP was weaker than consensus and our expectation (Cons: 2.5%; ours: 2.2% of GDP) amid lower than expected surplus in current account goods. Overall deficit narrowed from 2Q19 and 3Q18's of 3.04% and 3.28% of GDP. All other components of the current account have relatively been in line with expectation. CAD in 9M19 was at 2.8% of GDP, flat compared to 9M18.
Negative overall BOP
At the same time, BOP also registered a slight deficit of US$0.05bn in 3Q19, which was against Bank Indonesia's earlier forecast. This negative balance came as FDI shrunk 11.4% qoq to US$4.8bn, offsetting development in the portfolio investment of 5.3% yoy to US$4.8bn. The growth direction of FDI, which exhibited 39% yoy increase in 9M19 but lower on a qoq basis (-11.4% qoq in 3Q19), was in contrary to the trend from BKPM ( BKPM : -3.34% in 9M19; 0.13% qoq in 3Q19), which might underline earlier optimism for the capital and financial account (KFA) to offset the CAD.
Current account remained in-line to achieve full-year improvement
Given current track of development, we believe current account has remained on track to post an improvement (to 2.8% GDP in FY19, in-line with BI's forecast of 2.5-3.0%) over last year achievement of 3.0%. Given the historical cyclicality, CA usually widens in the 4Q amid increase in imports. Portfolio inflow has been strong in Oct19 (+Rp26tn/US$1.8bn of net inflow in bond and equity market) which shall support the KFA. (*)
Sumber : IPS