S&P upgrades Indonesia credit after Widodo election win

Official results last week confirmed Joko Widodo, center, won 55.5 percent of the vote in the April 17 election. (AFP)
Updated 31 May 2019

S&P upgrades Indonesia credit after Widodo election win

  • The upgrade reflects Indonesia’s strong economic growth prospects
  • The long-term rating was increased to BBB from BBB minus

JAKARTA, Indonesia: Ratings agency Standard & Poor’s said Friday it has upgraded Indonesia’s sovereign credit rating following the election of Joko Widodo to a second term as president.
The organization said the upgrade reflects Indonesia’s strong economic growth prospects, which “we expect to remain following the reelection of Joko Widodo recently.”
The long-term rating was increased to BBB from BBB minus and potentially makes it easier for the government to borrow abroad and at lower interest rates.
Official results last week confirmed Widodo won 55.5 percent of the vote in the April 17 election. His opponent Prabowo Subianto has alleged massive fraud but not provided any credible evidence. The Subianto campaign has submitted a Constitutional Court challenge to the election result.
“Although this dispute and isolated pockets of unrest associated with it add some uncertainty to Indonesia’s political settings over the near term, we do not expect it to have a material impact on the long-term policy environment or economic outlook,” S&P said.
Seven people were killed in what police said was orchestrated rioting in the capital Jakarta last week following announcement of the official results.
The ratings agency said Indonesia’s per capital economic growth has averaged 4.1 percent over the past decade compared with an average of 2.2 percent for countries at a similar income level.
Analysts forecast the country, the world’s fourth most populous, to be among the biggest economies by 2030.


Africa development bank says risks to continent’s growth ‘increasing by the day’

Updated 40 min 38 sec ago

Africa development bank says risks to continent’s growth ‘increasing by the day’

  • The trade dispute between US and China has roiled global markets and unnerved investors
  • African nations need to boost trade with each other to cushion the impact of external shocks

DAR ES SALAAM: The US-China trade war and uncertainty over Brexit pose risks to Africa’s economic prospects that are “increasing by the day,” the head of the African Development Bank (AfDB) told Reuters.
The trade dispute between the world’s two largest economies has roiled global markets and unnerved investors as it stretches into its second year with no end in sight.
Britain, meanwhile, appears to be on course to leave the European Union on Oct. 31 without a transition deal, which economists fear could severely disrupt trade flows.
Akinwumi Adesina, president of the AfDB, said the bank could review its economic growth projection for Africa — of 4 percent in 2019 and 4.1 percent in 2020 — if global external shocks accelerate.
“We normally revise this depending on global external shocks that could slowdown global growth and these issues are increasing by the day,” Adesina told Reuters late on Saturday on the sidelines of the Southern African Development Community meeting in Tanzania’s commercial capital Dar es Salaam.
“You have Brexit, you also have the recent challenges between Pakistan and India that have flared off there, plus you have the trade war between the United States and China. All these things can combine to slow global growth, with implications for African countries.”
The bank chief said African nations need to boost trade with each other and add value to agricultural produce to cushion the impact of external shocks.
“I think the trade war has significantly impacted economic growth prospects in China and therefore import demand from China has fallen significantly and so demand for products and raw materials from Africa will only fall even further,” he said.
“It will also have another effect with regard to China’s own outward-bound investments on the continent,” he added, saying these could also affect official development assistance.
Adesina said a continental free-trade zone launched last month, the African Continental Free Trade Area, could help speed up economic growth and development, but African nations needed to remove non-tariff barriers to boost trade.
“The countries that have always been facing lower volatilities have always been the ones that do a lot more in terms of regional trade and do not rely on exports of raw materials,” Adesina said.
“The challenges cannot be solved unless all the barriers come down. Free mobility of labor, free mobility of capital and free mobility of people.”