Is It Time To Buy Indonesia ETFs?
Zacks Investment Research | Nov 03, 2013 11:45PM ET
Indonesia weathered the storm better than most of its counterparts when the global financial crisis struck. But the nation was hit hard by the recent emerging markets crisis.
While poor infrastructure, poverty, unemployment and corruption still remain a matter of concern, inflation, the current account deficit and high interest rates have lately weakened the growth prospects for the Indonesian economy.
Indonesian Economy and its Roadblocks
While the lull in the emerging markets has been pretty widespread, the epicenter of the turmoil has arguably been in Indonesia.
In fact, the International Monetary Fund (IMF) lowered the economic outlook of Indonesia to 5.25% in 2013. The IMF’s earlier estimate in April this year was 6.3%. This was mainly due to fears regarding the Fed’s tapering program and a slowdown in exports. and weak exports.
Weaker prices for commodities such as coal and palm oil have also been a major cause for weak export revenues.
Moreover, the Bank of Indonesia has raised the benchmark interest rate (BI) for the fourth time this year to 7.25%. This was mainly done to stabilize its currency rupiah and to control the widening inflation rate and current account deficit.
En Route to Growth
While there have been dark clouds surrounding the Indonesian economy there is still some ray of hope. While IMF has lowered its economic outlook for Indonesia this year, the economy is poised to return to growth in 2014 with improvements in the global economy.
According to the Next Generation Summit, the Indonesian economy may emerge as a significant player in the ASEAN Economic Community (AEC).
Investor Bets
While many investors may have lately bottomed out due to a weakening Indonesian economy, some may still consider this to be a buying opportunity as the country is poised to gain momentum in early 2014. Here we have chosen a few ETFs to play with.
iShares MSCI Indonesia ETF (EIDOOriginal post
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