Slower M2 Growth Confirmed in November 2018 - Bank Sentral Republik Indonesia
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July 19, 2019

Broad money (M2), as a measure of liquidity in the economy, posted slower growth in November 2018. M2 was recorded at Rp5,670.0 trillion in the reporting period, with growth decelerating to 6.6% (yoy) from 7.2% (yoy) the month earlier on the back of M1 and quasi-money, which declined respectively from 6.3% (yoy) and 7.6% (yoy) to 5.0% (yoy) and 7.1% (yoy).

Based on the affecting factor, a decline in Net Foreign Assets (NFA) coupled with slower Net Domestic Asset (NDA) growth contributed to flatter M2 growth in the reporting period. NFA experienced a deeper contraction in November 2018, declined to -2.4% (yoy) from -0.7% (yoy) in the previous period, while NDA growth decreased from 10.4% (yoy) to 10.0% (yoy). NDA growth was constrained by a deeper contraction of net claims on the central government from -3.3% (yoy) to -3.5% (yoy) in November 2018. In addition, outstanding loans disbursed by the banking industry posted weaker growth in the reporting period, falling from 13.1% (yoy) to 11.9% (yoy).

Transmission of Bank Indonesia’s policy rate has remained effective, particularly to term deposit rates. The weighted average term deposit rate tracked an upward trend on all tenors in November 2018. Accordingly, the banking industry raised deposit rates on 1, 3, 6, 12 and 24-month tenors from 6.56%, 6.42%, 6.74%, 6.31% and 6.93% to 6.72%, 6.59%, 6.90%, 6.41% and 7.00% respectively. Meanwhile, the weighted average lending rate increased 3bps to 10.92% in November 2018.

Complete information and statistics concerning money supply as well as relevant analyses are available here.

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