September 3, 2018 / 3:50 AM / 3 months ago

Fitch affirms Indonesia's 'BBB' rating, maintains stable outlook

Sept 3 (Reuters) - Fitch Ratings affirmed its long-term foreign currency issuer default rating (IDR) on Indonesia at ‘BBB’ and maintained a stable outlook, citing low government debt burden, favourable growth outlook and structural indicators below rating peers.

The monetary and exchange-rate policy of Indonesia’s central bank has helped in stabilising foreign capital flows, the rating agency said in a report released on Monday, adding that the economy’s asset markets will remain vulnerable to “market jitters” due to possibilities of a widening current account deficit and dependence on foreign capital.

On Friday, the central bank of Southeast Asia’s biggest economy stepped up currency and bond intervention in an attempt to defend the Indonesia rupiah as the currency neared levels not seen since the Asian financial crisis.

Ongoing global trade tensions could cause Indonesia’s current account deficit to widen further than expected earlier, Fitch said.

The rating agency said it expected Indonesia’s gross domestic product (GDP) growth to rise to 5.2 percent in 2019 and 5.3 percent in 2020, from 5.1 percent in 2018, supported by the continued public infrastructure spending push.

“However, uncertainty surrounding these forecasts has increased as investment growth has been decelerating in recent quarters and rising interest rates may dampen growth,” Fitch said.

In December, Fitch raised Indonesia’s rating to ‘BBB’ from ‘BBB-‘, with a stable outlook, on the back of economic and monetary policies that made the economy resilient to external shocks. (Reporting by Kanishka Singh in Bengaluru; Editing by Gopakumar Warrier)

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