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Trade Outlook
Business Sentiment Survey May 2018
May 25, 2018 09:15

Optimism remains high but risks mount

THE FEBRUARY - MARCH 2018 RESULTS:

The Business Sentiment Index (BSI) climbed 1.7 percent to 134.3 in the reporting period of February – March 2018, the second survey on a spin in which the BSI has increased.

The improving sentiment in our latest survey mainly reflects more positive assessments on the performance of Indonesia’s economy and its future outlook. These two indices were up by 2.0 percent and 1.1 percent, respectively.

Despite this sanguine outlook, however, sentiment toward the four economic indicators covered in our survey – the rupiah, inflation, interest rates and stock prices – all took a dramatic turn for the worse as external developments created turbulence in the financial markets. In particular, CEOs are now much more downbeat on the prospects for the rupiah (this index slumped a precipitous 22.2 percent to 84.5).

Corporate performance was pretty solid according to the CEOs surveyed. Most encouragingly, profits grew at a faster pace: this index gained 4.6 percent to 110.3 as the COGS remained subdued (this index eased 0.4 percent to 104.3). And at the top line, sales growth was also robust (this index rose 3.5 percent to 108.8).

CEOs were again less satisfied with the performance of the government. This metric, as measured by the Business Confidence in the Government Index (BCGI), declined by 5.8 percent to 140.4 after slipping 2.5 percent in the previous survey. In particular, CEOs are less confident in the government’s ability to either create a healthier marketplace or rein in inflationary pressures.