News: International freight services provider Logwin has expanded the scope of its operations in the Indonesian market, according to the Journal of Commerce. The expansion sees the company move its operations to a new 720 sq uare m etre warehousing facility at Soekarno Hatta Airport. The facility, located within the vicinity of the airport, boasts refrigeration rooms and air conditioning, allowing the firm to take responsibility for incoming air freight cargo that has passed through customs.
BMI View: A key development in June has prompted BMI to revise its economic outlook for Indonesia this year. On June 22, the government raised the prices of subsidised premium petrol and diesel by 44.4% and 22.2% respectively. This led to an inflation spike (the annual rate of inflation rose to 8.6% in July) and to a tightening of monetary policy by Bank Indonesia (BI) which raised the benchmark interest rate by 25 basis points in June and by another 50bps in July. BMI's view is that both moves are a necessary and healthy response to some of the imbalances in the Indonesian economy. However, they will cool consumer demand and reduce economic growth. Signs of a slowdown were already making themselves felt, with Q213 GDP growth decelerating to 5.8% y-o-y, down from 6.0% y-o-y in Q113. Political risk is also rising a little: the government of President Susilo Bambang Yudhoyono arguably should have tackled the costly fuel subsidies issue much earlier in its term, and now seems to be entering something of a policy paralysis prior to the 2014 general elections. As a result of all these factors we are reducing our GDP forecast for 2013 as a whole to 5.8% (down from 6.1% in our last quarterly freight industry report). Given the underlying resilience of the Indonesian economy, we expect this to be only a transitory 'dip', with GDP recovering again to 6.0% in 2014 and 6.5% in 2015. Over the next five years annual GDP growth is set to average over 6%, confirming the country's status as one of the top performers in Asia.