Indonesias Real GDP Growth and Share by Expenditure

Source: Bloomberg & PermataBank Economic Research

Indonesias Real GDP Growth and Share by Industry

Source: Bloomberg & PermataBank Economic Research

GDP 2Q14: Another Deceleration due to easing consumption and investment

Author:Josua Pardede Economist HYPERLINK "mailto:josua.pardede@permatabank.co.id" josua.pardede@permatabank.co.id 021-5237788 (8029650)

GDP Review

Continued to slow. Indonesia economic growth in 2Q14 charted 5.12%yoy, down from 5.21% in a quarter earlier, driven by slowing private consumption, slight easing investment and deeper contraction net exports.

Private consumption has been slightly easing. Private consumption grew slower in 2Q14 to 5.58%yoy from 5.61%yoy due to slight softening purchasing power despite election which is initially expected to boost consumption. Moreover, the easing private consumption is also indicated by slowing trend in motor vehicle sales, moderation in money supply and contraction in retail sales (indicated by down trend in retail sales index during 2Q14).

Investment also shrank. Gross Fixed Capital Formation (investment) also grew slower in 2Q14 as investor remained wait and see on the election result which may impact business plan for their business. The slowing investment was indicated by contraction in capital goods imports as well as downward trend in industrial production during corresponding period.

Net export contracted deeper. Exports recorded negative growth in 2Q14 on the back of contraction in the volume of exports. On the other hand, imports grew positively in the corresponding period since imports demand remained strong ahead of Ramadhan month.

GDP Outlook

We expect the private consumption to recover in 3Q14 taking into account that inflation has been normalized in July 2014. Purchasing power is expected to remain strong with the burgeoning working-age population which will augment the size of workforce.

Investment is projected to gradually improve starting from 3Q14 supported by government commitment to boost infrastructure investment. Moreover, investor will be more confident investing in Indonesia especially after wait and see attitude in the run up to elections.

Going forward, we still expect the GDP in FY2014 to post around 5.1%-5.3%yoy.

PT. Bank Permata Tbk

WTC II, 28th Floor

Jl. Jend Sudirman Kav.29-31

Jakarta 12920, Indonesia

Telephone:+62 21 523 7788

Fax:+62 21 523 7253

This document is issued by Global Markets PT. Bank Permata, Tbk. (PermataBank) for information and private circulation purpose only. It does not constitute any offer, proposal, recommendation or solicitation to any person to enter into any transaction or adopt any hedging, trading or investment strategy, nor does it constitute any prediction of likely future movement in rates or prices or any representation that any such future movement will not exceed those shown in any illustration. All reasonable care has been taken in preparing this document, no responsibility or liability is accepted for error, omissions, negligence, and/or inaccuracy of fact or for any opinion expressed herein. Opinion, projection and estimates are subject to change without notice. PermataBank and/or its members of Board of Director and Commissioners, employees, affiliates, agents and/or its advisors disclaims any and all responsibility or liability relating to or resulting from the use of this documents whatsoever which may be brought against or suffered by any person as a result of acting in reliance upon the whole or any part of the contents of this document. You are advised to make your own independent judgment with respect to any matter contained herein, by fully aware of any consequences obtained on said judgment.

PT. Bank Permata Tbk

WTC II, 28th Floor

Jl. Jend Sudirman Kav.29-31

Jakarta 12920, Indonesia

Telephone:+62 21 523 7788

Fax:+62 21 523 7253

This document is issued by Global Markets PT. Bank Permata, Tbk. (PermataBank) for information and private circulation purpose only. It does not constitute any offer, proposal, recommendation or solicitation to any person to enter into any transaction or adopt any hedging, trading or investment strategy, nor does it constitute any prediction of likely future movement in rates or prices or any representation that any such future movement will not exceed those shown in any illustration. All reasonable care has been taken in preparing this document, no responsibility or liability is accepted for error, omissions, negligence, and/or inaccuracy of fact or for any opinion expressed herein. Opinion, projection and estimates are subject to change without notice. PermataBank and/or its members of Board of Director and Commissioners, employees, affiliates, agents and/or its advisors disclaims any and all responsibility or liability relating to or resulting from the use of this documents whatsoever which may be brought against or suffered by any person as a result of acting in reliance upon the whole or any part of the contents of this document. You are advised to make your own independent judgment with respect to any matter contained herein, by fully aware of any consequences obtained on said judgment.