QUARTERLY ANALYSIS The Development of Monetary, Banking, and Payment System, Quarter IV 2013

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QUARTERLY ANALYSIS
The Development of Monetary,
Banking, and Payment System,
Quarter IV 2013
The Quarterly Report Team, Bank Indonesia
The economic growth of Indonesian economy in quarter IV 2013 is relatively better than
Bank Indonesias prediction, and is with more balance growth structure. The growth increased
from 5.63% (yoy) in quarter III to 5.72% (yoy) in of quarter IV 2013. The growth is supported
by the improving real export along with the increase of demand from trading partners. On the
other side, domestic demand increase moderately reflected from the slowing down household
consumption and investment, particularly non-building investment. Overall, the economic
growth of Indonesia reached 5.78% in 2013.
The increasing export led to significant decrease of current account deficit and sustained
the improving performance of Indonesia Balance of Payment in quarter IV 2013. The current
account deficit of quarter IV 2013 decreased significantly to 1.98% of the GDP, which is
much lower than the current account deficit in the quarter III 2013 of 3.85%. Two major
contributions for export were from export in manufacture along with the increasing demand
from the United States and Japan, and export of natural resources regarding the anticipation
of export banning for mineral resources and coal (UU Minerba)1. On the other hand, the deficit
reduction on current account was also influenced by import reduction due to moderate growth
of domestic demand.
The improvement of Indonesias current account deficit in quarter IV 2013 was also
supported by surplus on financial capital transaction, generated from corporate foreign debt,
domestic with drawal from savings abroad, and foreign direct investment. Bank Indonesia
predicted that the strengthening Indonesias current account will continue to 2014, considering
the declining current account deficit along with the increasing surplus of capital and financial
transaction. On December 2013, Indonesias foreign exchange reserve increased to USD 99.4
billion or equivalent to 5.4 months of importand the installment of the government foreign
debt, which is above the international adequacy standard of 3 months import.
Depreciation pressure on Rupiah was lower inquarter IV 2013. This is influenced by
the improving performance of Indonesias Balance of Payment inquarter IV 2013 and several
policies taken by Bank Indonesia and the government. The Rupiah exchange rate, based on,

1 Act No. 4, 2009 on Mineral and Coal (Undang-undang No. 4 tahun 2009 tentang Pertambangan Mineral dan Batubara).

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depreciated by 4.85% (qtq), much lower than depreciation in quarter III 2013 by 14.29% (qtq).
On average, Rupiah depreciate by 8.76%, slightly increased from 8.18% in quarter III 2013.
Along with the lower pressure, the volatility of Rupiahs was also lower.
For the whole year, the rate of rupiah tended to depreciate in 2013. On average,
Rupiah depreciated by 10.4% from Rp9,358 per USD in 2012, to Rp10,445 per USD in 2013.
Nevertheless, the situation was manageable with lower volatility compared to other Asian
countries.
Responses on policies by Bank Indonesia and coordination with the Government performed
positive impact on the reduction of inflation pressure in quarter IV 2013. After the period of
high inflation pressure led by food volatility and the increase of fuel price in quarter II and III
2013, CPI inflation in quarter IV 2013 decrease from 4.08% (qtq) in quarter III 2013 to 0.75%
(qtq) in the quarter IV 2013; or equivalently from 8.40% to 8.38% (yoy).
Major contributions for the lower inflation pressure above were the deflation on some
volatile food groups and lower inflation on administered price group following the increase of
fuel price subsidy. Deflation on volatile food by 0.58% (qtq) in quarter IV 2013 was supported
by the increase of supply following the harvest period on some commodities such as red onion
and various chilies. Moreover, the relaxation of import regulation also contributed to the
availability of the commodity such as garlic.
On the other hand, administered price inflation of 1.40% (qtq) was relatively lower and
decreased sharply from 8.94% (qtq) in quarter III 2013. The sharp decrease is in accordance
with the less price regulation over strategic goods after the government increases their subsidy
on fuel price in quarter II 2013. The only inflation pressure within administered price group in
quarter IV 2013, was tariff increase on electric power stage IV in November 2013 along with
the increase of the fuel price for household, particularly the liquid natural gas (LPG) related to
the adjustment of distribution tariff at the end of the year.
Along with the two groups above, the core inflation decreased by 2.59% (qtq) to
1.00% (qtq).This is the subsequent impact of lower depreciation pressure on inflation, the
improving expected inflation after the increase of subsidized fuel price, as well as the decrease
of international price on non-food commodities, particularly gold.
The adjustment of Indonesias economy was well managed, sustained by the strong and
the stability of financial system. The banking industry resiliency remained solid with tolerable
credit risk, good liquidity and market condition, as well as the strong capital resiliency. The
growth of banking loan decreased from 21.9% on November 2013 to 21.4% on December
2013 (or equivalent to 17.4% by neutralizing the exchange rate depreciation). This is supported
by the slowing domestic demand and an increase of interest rate. Bank Indonesia coordinated
with OJK (Financial Service Authority) to direct the loan growth in accordance with moderate
growth of domestic demand. Meanwhile, the performance of stock market improved in 2014 as

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indicated by the increase of Stock Price Index (IHSG). In contrast, the performance of government
bonds market weakened as indicated on the higher yield on government bond (SBN).
Moderate growth of domestic economy in 2013 reduced the payment system transaction.
The transaction value of the payment system decreased by Rp1,930 trillion (-5.31%) to
Rp34,419.79 trillion, relative to quarter III 2013. The reduction was mainly occurred on Bank
Indonesia Real Time Gross Settlement (BI-RTGS) transaction; due to lower transaction for
monetary operation. Nevertheless, the transaction volume in quarter IV 2013 increased by 94.7
million transactions or increased 9.36% compared to quarter III 2013. The increasing volume
of transaction applied for all types of payment system with the highest increase in Card based
Payment Instrument (APMK), particularly ATM card and debit/ATM card, which is commonly
used by public during holidays.