Investment board blames rupiah volatility for Q2 slowdown

Investment Coordinating Board (BKPM) head Thomas Lembong has blamed the rupiah volatility for the investment slowdown in the second quarter of the year, saying that investors were likely taking a wait-and-see stance.

“From the perspective of businesspeople, if they are not convinced that the rupiah will stabilize, they will wait. Who knows if they might get lower [investment costs]?” said Thomas.

After posting average investment growth of 7.43 percent over the three previous quarters, Central Statistics Agency (BPS) data showed that growth slumped to 5.87 percent year-on-year (yoy) in the second quarter of the year.

The slowdown, however, had little impact on gross domestic product (GDP) expansion during the corresponding period, which instead grew 5.27 percent – the highest quarterly growth during President Joko “Jokowi” Widodo’s administration.

Growth was boosted by household consumption, which accounted for more than half of the 5.14 percent yoy GDP growth in the second quarter.

Thomas added that investment growth in the second half of the year would depend on the success of the government’s measures in boosting its foreign reserves, such as expanding the 20 percent biodiesel blend ( B20 ) policy and other measures to curb imports.

“If [the measures are] implemented well, they could have an impact on the foreign exchange reserve, which would then restore investors’ faith in the stability of the rupiah,” he said. (bbn)

The Jakarta Post


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