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Macroeconomic: Indonesia Economy Remains Strong.

The economic growth in the second quarter 2007 reached 6.1% (y-o-y), with estimated increase up to 6.52% in the third quarter. This growth is higher when compared to the similar quarter during the previous year, which was 5.1% (y-o-y). Economic growth acceleration during the third quarter of 2007 was supported by the increase of investment (local & international), exports, stable foreign exchange, and higher consumption.

Below is the chart of GDP growth for several Asean countries:


Macro-economy stabilization and stable monetary system as well as attractive interest rate pushed the capital flow to enter domestic financial markets. With ongoing transaction balance sheet reporting surplus of estimated up to USD 1.2 billion, this capital cashflow supported surplus of the NPI USD 3.7 billion. Because of this growth on June 2007, available devisa was increase to USD 50.9 billion or same as 5 month import needs and government liabilities payment.


As the inflation pressure getting lower, there’s space in the second quarter of 2007 for Bank Indonesia to decrease reference interest rate, BI Rate. After many assessment, BI Rate is lowered two more times, each by 25 basis points (bps) until by the end of June 2007, BI Rate stood at 8.3%. The sector real of the business world is expected to utilize the decreasing BI Rate for their activities.
Meanwhile, macroeconomic stabilization supported a better achievement in financial sector. In general, bank sector relative stable showed by some indicator like: credit quality, profitability and capitalization. Intermediation implementation showing a good growth, with decreasing of interest rate gives a positive effect to credit demand. Meanwhile decreasing of interest rate and exchange rate relative stable push the decline of risk in economic.
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