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Consumer Confidence
Money Development 06 Juni 2018
June 06, 2018 14:58

Money supply grew at a slightly slower pace in April than it did in March. Broad money or M2 grew by 7.4 percent YoY in April, or slightly lower than its growth pace of 7.5 percent YoY in March. The slower pace of M2 growth was mainly due to the slower growth of M1 (narrow money) which grew by only 10.2 percent YoY in April, or less than the 11.9 percent YoY growth pace in March. By contrast, the growth rate of quasi money increased from 6.2 percent YoY in March to 6.6 percent YoY in April. This helped to avert a further slowdown in the pace of M2 growth.

Deposits growth was stagnant in April at 7.3 percent YoY. As for credit growth, it edged up to 8.9 percent in April from 8.5 percent in the previous month. Despite this, the uptrend in consumer credit growth corrected slightly as it fell to 11.1 percent. Money Supply: Moderate Slowdown

Money supply grew at a slightly slower pace in April than it did in March. Broad money or M2 grew by 7.4 percent YoY in April, or slightly lower than its growth pace of 7.5 percent YoY in March. The slower pace of M2 growth was mainly due to the slower growth of M1 (narrow money) which grew by only 10.2 percent YoY
in April, or less than the 11.9 percent YoY growth pace in March. The slower growth of both cash and IDR giro reined in M1 growth in April. Cash grew by 13.8 percent YoY in April, or down from its growth pace of 17.1 percent YoY in March. As for IDR giro, its growth slowed from 8.7 percent YoY in March to 7.9 percent YoY in April. The slowdown of M1 was consistent with slower than expected GDP growth in Q1 2018 (5.06 percent). By contrast, the growth rate of quasi money increased from 6.2 percent YoY in March to 6.6 percent YoY in April. This helped to avert a further slowdown in the pace of M2 growth. The slower growth of M2 in April owed to the slowdown in net foreign assets growth since foreign exchange reserves declined as the rupiah depreciated in April. Furthermore, the growth of government accounts in BI and the banking system climbed from 11.7 percent YoY in March to 16.6 percent YoY in April, in line with government bond issuances which increased from IDR 66.83 trillion in March to IDR 78.14 trillion in April.

In May, money supply is expected to grow at a moderate pace. Global uncertainties – especially in the US – remain high, affecting rupiah volatility and creating the potential for capital outflows. BI’s benchmark interest rate was hiked twice in May (50 bps in total). The onset of the fasting month of Ramadan should, however, help to support money supply growth in May.