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Market Report, "Indonesia Freight Transport Report Q2 2014", Published

New Transportation research report from Business Monitor International is now available from Fast Market Research


Boston, MA -- (SBWIRE) -- 05/05/2014 -- Economy Continues To Slow Into 2014; Recovery In 2015

Following on from our comments in our last quarterly report, we continue to see Indonesia undergoing an adjustment process which will see lower growth on the short term, as the authorities seek to cool and rebalance an economy that had over-heated. Quarterly growth was below expectations in Q313, but then above expectations in Q413. Despite this fluctuation the economy in our view remains on a slight downtrend as efforts are made to narrow the current account deficit, squeeze out inflation, and tighten monetary policy. For full-year 2013, GDP growth was 5.8%, the lowest level in four years. We are predicting a further slowing to 5.4% GDP growth in 2014 (no change compared to our last quarterly report), picking up to 6.5% growth in 2015. For this year private consumption growth will slow, government spending is likely to increase (this is an election year), investment will fall, and net exports will make a small recovery. Our long-term outlook remains sanguine, with real GDP growth projected to average 6.2% per annum over the coming decade. Much of this, however, will be driven by strong growth in fixed capital. Should improvements in the investment climate stall or reverse - after all, the country is still ranked at a lowly 120th in the World Bank's Doing Business 2014 report - Indonesia could fail to realise its strong growth potential.

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Our freight transport forecast for 2014 shows a significantly slower pace of growth, as the economy slows. This slowdown will be partially offset by something of a recovery in foreign trade that we expect during the course of the year. On the medium to longer term we continue to think that the key to sustainable growth is investment in port infrastructure, including road and rail links in the hinterland areas. We are encouraged to see some evidence of progress on this front. Capacity problems remain an issue, but new investment projects in ports, airports, road, and rail are being launched.

Industry Data

- Air freight volumes are forecast to expand by 7.0% in 2014, with average annual growth of 8.2% during our forecast period to 2018.
- Rail freight volumes are estimated to rise by 8.3% in 2013, with average growth of 7.8% during our forecast period.
- 2014 Tanjung Priok total tonnage forecast to grow 5.8% to 56.172mn tonnes, with average growth of 5.3% expected over our forecast period to 2018.
- 2014 Palembang total tonnage forecast to grow 4.8% to 12.973mn tonnes, with average growth of 3.8% over our forecast period.
- Indonesian foreign trade (exports + imports) expected to grow by 5.6% in real terms in 2014, up from 2.3% in 2013.

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