During 16–30 September, amongst the participating countries in ASEAN, the central banks of Indonesia, Thailand, and the Philippines each held monetary policy meetings, and Indonesia’s second consecutive decision to lower its interest rates is worth attention. Furthermore, Vietnam exhibited a high real GDP growth rate for 3Q, recording 7.5%. Please refer to the table attached at the end of this report for an overview of the macroeconomic indices for ASEAN economies released during 16–30 September.

1. 01
ASEAN Macroeconomic Trends:
Indonesia Continues to Lower Interest Rates;
Vietnam Records Over 7% GDP Growth for First Time in Seven Years
By Takashi Kawabata - SPEEDA Chief Asia Economist,
Translated by Kenneth Bresson
During 16–30 September, amongst the participating countries in ASEAN, the central banks of Indonesia,
Thailand, and the Philippines each held monetary policy meetings, and Indonesia’s second consecutive
decision to lower its interest rates is worth attention. Furthermore, Vietnam exhibited a high real GDP
growth rate for 3Q, recording 7.5%. Please refer to the table attached at the end of this report for an
overview of the macroeconomic indices for ASEAN economies released during 16–30 September.
20171006

2. 02
ASEAN Macroeconomic Trends:
Indonesia Continues to Lower Interest Rates;
Vietnam Records Over 7% GDP Growth for First Time in Seven Years
Indonesia: Central Bank Lowered Interest Rates for the Second Consecutive
Board of Governor’s Meeting
Indonesia’s central bank, Bank Indonesia, held its regular Board of Governor’s Meeting on 22
September, where it was decided to lower the policy interest rate by 25 basis points (bps) to 4.25%.
The deposit and lending facility rates were also lowered by 25 bps each in tandem to 3.50% and 5.00%,
respectively.
Bank Indonesia issued statements outlining the background behind the decision, with summaries
provided below:
The country’s inflation rate is expected to remain low through to end-2017, with estimates that it will
be below the mid-range inflation targets for both 2018 and 2019. The inflation targets are +4.0±1% for
2017, and +3.5±1% for 2018 and 2019.
Lowering interest rates can further promote lending amongst banks, as well as economic recovery.
External risks such as the raising of interest rates by the US Federal Reserve Board were also taken into
consideration.

3. 03
ASEAN Macroeconomic Trends:
Indonesia Continues to Lower Interest Rates;
Vietnam Records Over 7% GDP Growth for First Time in Seven Years
Bank Indonesia noted that it is seeing a decline in financial risk as the global economy continues to
improve driven by advanced economies, with the USA showing signs of higher-than-expected growth
supported by domestic demand, and consumption improving in Europe. Amongst emerging economies,
it noted that while India’s economy is expected to slow down, both consumption and lending are on
the rise in China, which may lead to the realisation of even stronger economic growth.
The domestic economy in Indonesia is estimated to grow by 5.0–5.4% in 2017 compared to the
previous year, and grow further by 5.1–5.5% in 2018. In 3Q 2017, household spending improved
centred on retail and durable consumer goods, with construction investment remaining steady
together with a rise in government expenditures. Exports are also anticipated to improve alongside a
rise in international commodity prices.
In addition, with the 0.02% rise in its market rate, the Indonesian rupiah is anticipated to remain stable,
and the accelerated inflation in August that was brought upon by an increase in demand before the
Lebaran holiday has slowed down and returned to normal.
Indonesia’s economic growth rate continued on a flattened trend over 1Q and 2Q at +5.0% YoY. The
consecutive lowering of interest rates reveals the hopes that Bank Indonesia has for stimulating
domestic economic growth prior to any increase in risks of change in the global economy.

4. 04
ASEAN Macroeconomic Trends:
Indonesia Continues to Lower Interest Rates;
Vietnam Records Over 7% GDP Growth for First Time in Seven Years
Indonesia’s unit automobile sales amounted to 96,466 units in August, the second best performing
month in 2017 after March, which recorded 102,336 units. This figure also implies that the rebound
drop from the increased consumption activity prior to the Lebaran holiday has ended (refer to the
report covering 16–31 August, "Malaysia and the Philippines Undergoing Rapid Growth; Indonesia
Lowered Interest Rate", for more information on the increase in consumption before the Lebaran
holiday).

5. 05
ASEAN Macroeconomic Trends:
Indonesia Continues to Lower Interest Rates;
Vietnam Records Over 7% GDP Growth for First Time in Seven Years
The below news topics were also highlighted over 16–30 September:
In the high-speed rail project led by China for connecting the capital city of Jakarta and Bandung, West
Java, local newspapers have released outlooks on the expropriation of land. Although the use of
existing lines was under discussion, new lines may indeed be constructed, and if affiliated parties are
able to attain sites for construction with no issue, the high-speed rail line may be able to launch
operations in 2020.
Indonesia’s government-owned power company, PLN, is faced with a considerable amount of debt.
The Palu Special Economic Zone in Central Sulawesi becomes the third area out of 11 designated areas
to launch operations.
The Indonesian government formulated a policy for establishing an institution for selecting fin-tech
companies for business operation.
Penal regulations regarding those who do not participate in tax amnesty are to be strengthened.

6. 06
ASEAN Macroeconomic Trends:
Indonesia Continues to Lower Interest Rates;
Vietnam Records Over 7% GDP Growth for First Time in Seven Years
Thailand: Economic Recovery Led by Foreign Demand; Individual Consumption
Still at Midway Point
Thailand’s total export value for August totalled to USD 21.22 billion, rising favourably by 13.2% YoY.
Exports for PCs, machinery, and components to the USA and Japan were favourable, increasing by
16.8% YoY and driving overall exports. Electronic products and components followed thereafter, rising
by 13.5% YoY. By country, China accounted for the largest portion of the export value with USD 2.69
billion, exhibiting high growth at 25.5% YoY.
The Bank of Thailand held its Monetary Policy Committee Meeting on 27 September, where it decided
to keep the policy interest rate at 1.50%. Reasons behind the decision included the following:
The country’s growth is accelerating past previous estimates due to increases in the exports of goods
and services.
The prices of fresh food products have settled down, with headline inflation accelerating at a gradual
rate.
In addition to exports, the Bank of Thailand also forecast that the tourism industry will drive the
country’s economy alongside the strong recovery of the global economy.

7. 07
ASEAN Macroeconomic Trends:
Indonesia Continues to Lower Interest Rates;
Vietnam Records Over 7% GDP Growth for First Time in Seven Years
Thailand has numerous tourist destinations including historic Buddhist temple ruins and beautiful
coastlines. The country’s tourism industry is expected to be the growth driver for its economy.
Photo by GettyImages/4FR
While household spending is on the rise in Thailand, it has not yet reached a sufficient, strong level. In
particular, consumer activities have not fully recovered amongst the country’s lower income bracket.
This again supports our viewpoint that consumer confidence has been levelling off over the long term,
and the possibility of an instant, significant recovery might be remote, as mentioned in the previous
report.
Furthermore, the Bank of Thailand noted that external risks also exist, such as the conditions in the
USA regarding policies on emigrant workers and geopolitical risks.

8. 08
ASEAN Macroeconomic Trends:
Indonesia Continues to Lower Interest Rates;
Vietnam Records Over 7% GDP Growth for First Time in Seven Years
Malaysia: Coincident Index Reaches Highest Level to Date
Amongst the economic indicators announced for Malaysia, the country’s coincident index rose by 0.9%
in July from the previous month to reach 131.8, breaking previous records. The country’s leading index
also rose by 0.2% from the previous month. While Malaysia is exhibiting favourable economic
conditions, the country’s leading index has continued to increase and decrease repeatedly.

9. 09
ASEAN Macroeconomic Trends:
Indonesia Continues to Lower Interest Rates;
Vietnam Records Over 7% GDP Growth for First Time in Seven Years
The Philippines: Maintains Current Policy Interest Rate
The Central Bank of the Philippines (Bangko Sentral ng Pilipinas, BSP) held its Monetary Policy Meeting
on 21 September, and decided to maintain the policy interest rate at the current 3.00%. The BSP
highlighted the below two points behind its decision:
The country’s current inflation is manageable.
The current rate is at an appropriate level for achieving the 2017 inflation target of +3±1% YoY.
While forecasting acceleration in inflation, the BSP also noted that while the government’s current tax
reforms will put pressure on the rising commodity prices, it does not expect these measures to have a
major impact in the medium term by way of enhancing productivity.
In regard to the global economy, the BSP highlighted that increases in geopolitical risks and unclear
macroeconomic policies in OECD countries pose risks for international demand for products and
services from the Philippines, despite a general favourable trend. As for the domestic economy,
consumer sentiment and business confidence are both on positive trends, with the economy
supported by sufficient liquidity, and the BSP believes that it will remain strong for the time being.

10. 10
ASEAN Macroeconomic Trends:
Indonesia Continues to Lower Interest Rates;
Vietnam Records Over 7% GDP Growth for First Time in Seven Years
Vietnam: GDP Exhibits High Growth at 7.5% in 3Q
Vietnam’s real GDP growth rate for 3Q was 7.5% YoY, marking the country’s highest growth since the
collapse of Lehman Brothers. Furthermore, this is the first time that the figure has exceeded 7% since
4Q 2010. Exports are driving this growth, with smartphones and related components, which account
for approximately 20% of the country’s total export value, recording remarkable growth in particular
at 45.5% YoY in 3Q.
Vietnam’s exports were previously centred on agricultural, forestry, and fishery products, as well as
processed food items. However, Samsung opened its largest factory in the world in Vietnam in 2009
and has continued to expand it since then, which has largely contributed to the country’s exports.
It should be noted that Vietnam’s macroeconomic statistics are released prior to the end of a particular
month or quarter as a standard. These statistics are not treated as preliminary figures, but rather as
definitive values, although there are cases where they are revised after announcement.

11. 11
ASEAN Macroeconomic Trends:
Indonesia Continues to Lower Interest Rates;
Vietnam Records Over 7% GDP Growth for First Time in Seven Years
Summary and Key Focus in the Next Report
During 16–30 September, Indonesia lowered its interest rates for the second time in a row, and began
endeavouring into boosting economic growth. Furthermore, Vietnam received attention for recording
high economic growth.
The next report will cover the period from 1–15 October and focus on the following indicators in
particular (dates in the brackets are scheduled release dates).
Indonesia: Inflation Rate (September; 2 October), CCI (September; 5 October), Retail Sales (August; 11
October)
Thailand: Inflation Rate (September; 2 October), BCI and CCI (September; 3 October)
Malaysia: Balance of Trade (August; 6 October), Industrial Production (August; 12 October), Retail Sales
(August; 13 October)
The Philippines: Inflation Rate (September; 5 October), Balance of Trade (August; 10 October)
Singapore: Manufacturing Sector PMI (September; 3 October), Nikkei PMI (September; 3 October),
Retail Sales (August; 12 October), Real GDP Growth Rate (3Q Preliminary Figure; 13 October)

12. 12
ASEAN Macroeconomic Trends:
Indonesia Continues to Lower Interest Rates;
Vietnam Records Over 7% GDP Growth for First Time in Seven Years

13. 13
ASEAN Macroeconomic Trends:
Indonesia Continues to Lower Interest Rates;
Vietnam Records Over 7% GDP Growth for First Time in Seven Years

14. 14
ASEAN Macroeconomic Trends:
Indonesia Continues to Lower Interest Rates;
Vietnam Records Over 7% GDP Growth for First Time in Seven Years
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