Increase in BI Interest, Affects the Indonesian Economy 2019 and is Estimated to Only 5.1%
Rakyat Digital. For the umpteenth time, Bank Indonesia raised the BI 7 Days Repo rate to 6 percent on Thursday last week. Bank Mandiri Chief Economist Anton Gunawan said the increase in BI's benchmark interest rate would have an impact on 2019 economic growth to 5.1 percent, below the government's target of 5.3 percent.
The slowdown was caused by limited investment due to the increase in BI's benchmark interest rate. "We see that there is tightening. Because the benchmark interest rose, there was little impact, "he said to katadata.co.id after the Indonesia Investment Conference & Exhibition 2018 at the Ritz-Carlton, Jakarta, Wednesday (11/21).
He estimates that global liquidity will decrease, affecting foreign investment, or foreign direct investment (FDI). On the other hand, the government's efforts to attract foreign investors still need a transition period of half a year.
Meanwhile, household consumption is also expected to be affected by the increase in benchmark interest rates. The decline in consumption was caused by an increase in lending rates. Moreover, Anton assessed that the government's efforts to suppress imports and increase exports have not been maximized. This also influences the achievement of growth next year.
Although, according to him, the increase in BI's benchmark interest rate by 170 basis points so far this year has not had a full impact on credit interest. "Usually there is a lack, not all of them have raised the lending rate. But some already, "he said.
Equivalent of money, economist of the Institute for Development of Economics and Finance (Indef) Bhima Yudhistira said the increase in BI's benchmark interest rate would have an impact on economic growth next year. He estimates that the increase in credit from the policy of BI will cut 2019 growth to 5.1 percent, according to the lower limit of BI projections.
"The transmission to mortgages (homeownership loans), expensive motor vehicle loans. Even though the growth backbone is household consumption, "he said. Although, he believes that the increase in benchmark interest will indirectly have an impact on credit increases this year, but in the next 3-5 months. As a result, people will hold back and be careful in shopping.
In addition to the increase in mortgages, property values will rise because the price of raw materials increases. On the other hand, construction loans were affected by the increase in benchmark interest rates. "Consumers take expensive mortgages even though there is a Loan To Value (LTV)," he said.
While from the business side, the increase in benchmark interest will affect the increase in production costs. This is in line with the increase in raw material prices for imports due to rupiah fluctuations and rising debt interest expenses. (Also read: Demand is slowing, BNI has not raised interest rates on mortgages and KKB).
Sectorally, businesses that rely on large banking loans are textiles and plantations, especially oil and rubber. The sector requires credit to meet raw material needs. Again, the raw materials are increasingly expensive because they are obtained with imports so that they are affected by exchange rate fluctuations.
In terms of investment, Bhima said that most investments use credit. With the increase in BI's benchmark interest rate, investment credit will go up. The connection does not stop here. Political parties are expected to reduce investment next year. Investors are expected to hold back from investing their funds because of waiting for political certainty.
So far, the decline in direct foreign investment (FDI) occurred in the third quarter of 2018. The number of foreign investors in the period was only Rp. 89.1 trillion. This value dropped 20.2 percent compared to last year which reached Rp. 111.7 trillion. "It is a sign that relying on investment as a motor of growth is rather difficult," he said.
Previously, Bank Indonesia projected 2019 economic growth would be lower than the previous projection of 5.1-5.5 percent. This is in line with the increase in the BI 7 Day Reverse Repo Rate benchmark rate which has reached 175 basis points so far this year. "It must have an impact on growth. Interest is getting higher, we cut the 2019 outlook to a lower range, "said BI Deputy Governor Dody Budi Waluyo.
The slowdown was caused by limited investment due to the increase in BI's benchmark interest rate. "We see that there is tightening. Because the benchmark interest rose, there was little impact, "he said to katadata.co.id after the Indonesia Investment Conference & Exhibition 2018 at the Ritz-Carlton, Jakarta, Wednesday (11/21).
He estimates that global liquidity will decrease, affecting foreign investment, or foreign direct investment (FDI). On the other hand, the government's efforts to attract foreign investors still need a transition period of half a year.
Meanwhile, household consumption is also expected to be affected by the increase in benchmark interest rates. The decline in consumption was caused by an increase in lending rates. Moreover, Anton assessed that the government's efforts to suppress imports and increase exports have not been maximized. This also influences the achievement of growth next year.
Although, according to him, the increase in BI's benchmark interest rate by 170 basis points so far this year has not had a full impact on credit interest. "Usually there is a lack, not all of them have raised the lending rate. But some already, "he said.
Equivalent of money, economist of the Institute for Development of Economics and Finance (Indef) Bhima Yudhistira said the increase in BI's benchmark interest rate would have an impact on economic growth next year. He estimates that the increase in credit from the policy of BI will cut 2019 growth to 5.1 percent, according to the lower limit of BI projections.
"The transmission to mortgages (homeownership loans), expensive motor vehicle loans. Even though the growth backbone is household consumption, "he said. Although, he believes that the increase in benchmark interest will indirectly have an impact on credit increases this year, but in the next 3-5 months. As a result, people will hold back and be careful in shopping.
In addition to the increase in mortgages, property values will rise because the price of raw materials increases. On the other hand, construction loans were affected by the increase in benchmark interest rates. "Consumers take expensive mortgages even though there is a Loan To Value (LTV)," he said.
While from the business side, the increase in benchmark interest will affect the increase in production costs. This is in line with the increase in raw material prices for imports due to rupiah fluctuations and rising debt interest expenses. (Also read: Demand is slowing, BNI has not raised interest rates on mortgages and KKB).
Sectorally, businesses that rely on large banking loans are textiles and plantations, especially oil and rubber. The sector requires credit to meet raw material needs. Again, the raw materials are increasingly expensive because they are obtained with imports so that they are affected by exchange rate fluctuations.
In terms of investment, Bhima said that most investments use credit. With the increase in BI's benchmark interest rate, investment credit will go up. The connection does not stop here. Political parties are expected to reduce investment next year. Investors are expected to hold back from investing their funds because of waiting for political certainty.
So far, the decline in direct foreign investment (FDI) occurred in the third quarter of 2018. The number of foreign investors in the period was only Rp. 89.1 trillion. This value dropped 20.2 percent compared to last year which reached Rp. 111.7 trillion. "It is a sign that relying on investment as a motor of growth is rather difficult," he said.
Previously, Bank Indonesia projected 2019 economic growth would be lower than the previous projection of 5.1-5.5 percent. This is in line with the increase in the BI 7 Day Reverse Repo Rate benchmark rate which has reached 175 basis points so far this year. "It must have an impact on growth. Interest is getting higher, we cut the 2019 outlook to a lower range, "said BI Deputy Governor Dody Budi Waluyo.
Komentar
Posting Komentar