Live Chat Software
Berita Dan Riset Terbaru
Consumer Confidence
Money Development 07 April 2018
May 08, 2018 08:44

Money supply continued to grow at a slow pace in March. Broad money or M2 only grew by 7.5 percent YoY in March, or slower than February’s growth pace of 8.3 percent YoY. The slow pace of growth was seen in all the money supply components.Deposits posted weak growth in March at only 7.3 percent year on year, the lowest growth since October 2016. Credit growth reached 8.5 percent - down from last year’s growth pace of 9.2 percent. Consumer loans remained as the main driver of credit growth, up by 11.4 percent. In April, we expect faster credit growth on the back of brisker economic activity. Nonetheless, some volatility created by external factors may disrupt lending.Deposits, meanwhile, are expected to grow only moderately given lower rates and heightened risks that may affect the asset allocation preferences of fund holders. Money Supply: Slowing Further Money supply continued to grow at a slow pace in March. Broad money or M2 only grew by 7.5 percent YoY in March, or slower than February’s growth pace of 8.3 percent YoY. The slow pace of growth was seen in all the money supply components. The growth rate of quasi money slowed from 6.7 percent YoY in February to 6.2 percent YoY in March. Furthermore, narrow money or M1 grew at a slower pace in March of only 11.9 percent YoY, or less than the 13.0 percent YoY growth pace in February. The growth rate in securities other than shares also dropped to negative 11.9 percent YoY in March, or down from 19.4 percent YoY in February. Looking at the factors which impact M2 growth, the slower growth of M2 in March mainly reflects the slowdown in net foreign assets due to a decline in foreign exchange reserves as the rupiah depreciated in March. Furthermore, the growth of government accounts in BI and the banking system climbed from 2.9 percent YoY in February to 11.7 percent YoY in March, while government bondissuances fell from IDR 106.90 trillion in February to IDR66.83 trillion in March.

The increase in the growth of government accounts in BI and the banking system reflects a decline in government expenditures. In April, money supply is expected to grow at a slower pace. Global uncertainties – especially in the US – remain high, possibly leading to rupiah volatility and further capital outflows. For the full year of 2018, however, we estimate a faster pace of economic growth of 5.20 – 5.30 percent. As such, we still expect brisker money supply growth this year.