Fitch: Economic Indicators Positive for Indonesia Consumer Firms
OREANDA-NEWS. Recent improvement in some sentiment, consumer demand and purchasing power indicators in Indonesia should be positive for certain consumer related sectors, says Fitch Ratings. Indicators ranging from card-based transaction spending, domestic automotive and motorcycle sales, the consumer confidence index and traffic volume point to improving demand, albeit the sustainability of the acceleration remains uncertain.
The latest data from Bank Indonesia shows total credit and debit card transaction value in February 2016 growing 16% yoy, the biggest increase since December 2014. Value per card transaction grew 1.1% yoy in the same period, the first positive growth since October 2014. However, this is low compared to Indonesia's high-growth period between 2010 and 2012, when total credit and debit card transaction value increased by a compound annual growth rate of 22.8%. Annual growth tapered off to 16.9% and 10.2% in 2014 and 2015 respectively, alongside a slowdown in economic growth.
Automotive sales in February 2016 fell 0.6% yoy, the smallest decline since August 2014. Motorcycle sales declined 5.6% in the same period, which marked a significant deceleration in the rate of contraction from the 17.6% fall in 2015. Furthermore, overall traffic volume growth in Indonesia's major toll roads picked up to 8% yoy in the first two months of 2016, after falling to 1%-4% yoy in 2014-2015 from between 9%-14% yoy in 2011-2012.
The improvement in these consumption indicators combined with lower inflation suggest some pick-up in consumer purchasing power and demand this year. Notably, Bank Indonesia's consumer confidence index swung from 97.5 in September 2015, the lowest since 2008, to 109.8 in March. A score below 100 indicates there were more pessimistic responses than optimistic ones, while a score above 100 means optimism outweighed pessimism.
The pick-up in purchasing power and demand will be particularly beneficial for corporates in the consumer sector, such as PT Mitra Pinasthika Mustika Tbk (BB-/Stable), PT Japfa Comfeed Indonesia Tbk (BB-/Negative) and PT Sri Rejeki Isman Tbk (A(idn)/Stable). It will also be positive for retail companies like PT Sumber Alfaria Trijaya Tbk (AA-(idn)/Stable), PT Multipolar Tbk (B+/Stable) and PT Finnet Indonesia (A(idn)/Stable).
However, significant economic challenges and risks remain. Implementing reforms to sustain a recovery through the medium-term will take time and the extent of implementation will determine the pace of growth. Growth is not expected to accelerate rapidly anytime soon and the slight improvement so far seems driven by public investment rather than private consumption. Weak domestic corporate balance sheets do not point to rapid acceleration in private investment growth in the near term. Hence, certain corporate sectors will continue to face challenging conditions. This includes the property sector, where Fitch maintains a negative sector outlook.
Комментарии