“We think the economy is set to struggle over the coming quarters,” senior Asia economist Gareth Leather wrote in a commentary. The sharp falls in inflation that boosted households’ purchasing power last year are over, Capital Economics pointed out. Another main drag on growth will come from exports, which will likely be weakened by softer global growth and easing commodity prices.
“With economic activity likely to remain weak and concerns about inflation and the currency set to recede in the coming quarters, we expect Bank Indonesia to kick-start its monetary easing cycle in October,” Leather said.