Indonesia stuck with sub-par growth in 2016, experts warn

Blame it on ineffective domestic policies.

A recent poll conducted by Moody's Investor Service in Jakarta shows that more than two-thirds of respondents believe a growth revival in Indonesia is unlikely in 2016.

Respondents also say that the risks to growth are broad-based.

Some 36% of those polled say domestic politics and ineffective policy implementation constitute the largest risk to Indonesia's macroeconomic profile, followed by China's growth slowdown and the impact of lower global commodity prices (31%), and rupiah depreciation triggered by the US Federal Reserve's tightening of monetary policy (31%).

"The largest potential threats to Indonesia's economic growth in 2016 comprise a more pronounced correction in China's GDP growth, and a disorderly response to the US Federal Reserve's tightening of monetary policy," says Rahul Ghosh, a Moody's Vice President and Senior Research Analyst."In contrast to the market view, we believe that the risks from
domestic politics have receded somewhat."

On the issue of currency depreciation, most of the market participants Moody's surveyed foresee additional downside pressure on the Indonesian rupiah against the US dollar in 2016.

Half of the respondents see the credit profiles of property developers (26%) and oil and gas companies (24%) as most exposed to further currency weakness, followed by telecommunications companies (19%).

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