Indonesia: Markets await political clarity - ANZ

ANZ analysts point out that the Indonesia will hold its first ever simultaneous presidential and legislative elections next Wednesday, 17 April and will be a key event.

Key Quotes

“The presidential race will see Prabowo Subianto challenge the incumbent president, Joko Widodo (Jokowi), in a rematch of the 2014 contest which the latter won with 53.1% of the votes. Pollsters are predicting a victory for the incumbent, but a surprise win by the opposition cannot be ruled out if the turnout rate is lower than expected.”

“While the broader thrust of economic policies between the two camps is not markedly different, a win by the opposition could still introduce some uncertainty in the near term, not least because they are untested in governing.”

“Past near-term political uncertainties, key risk factors for local markets have receded as strong portfolio inflows returned year-to-date. We believe Bank Indonesia (BI) will not rush to cut interest rates until there is a material narrowing in the current account deficit. Overall, we see modest upside for the IDR and remain constructive on duration.”