Indonesia Strategy:Key themes for 2017

Regardless of views of reflation/domestic stimulus in China, the current strengthin spot and forward prices of key export commodities for Indonesia infers anadditional US$8-10b credit to the trade/current account in FY17and providesupside to consensus 5.1% estimates by c. 20bps. There is a very highcorrelation between real GDP growth and key export commodities: Thermal coal,CPO, copper, nickel, gold, tin and rubber. Indonesia is a net oil & gas importersince FY10, and lower-for-longer oil prices are an additional tailwind.