Coronavirus

Are financial markets too divorced from reality?

Banks in the country have much more to be optimistic about than their counterparts elsewhere. There are risks on the horizon – but there are also big opportunities.

Bank Mandiri’s chairman and chief executive tell Asiamoney how Indonesia and their bank will weather the coronavirus pandemic.

Perry Warjiyo, Indonesia’s central bank governor, may not be the country’s leader, but with Covid-19 ravaging the economy, the population of 273 million have more riding on him than on the president.

The bank’s regional expansion has been challenged by the Covid-19 pandemic. But its chief executive sounds an optimistic note – seeing opportunity in a moment of volatility.

Many Filipinos switched to digital channels during lockdown. Bankers think customers are unlikely to return to branches now that they have had a taste of what it is like to go cashless. That would be good for banks – and for financial inclusion.

There’s a team made up of staff from Bangko Sentral ng Pilipinas and the department of finance who call themselves ‘the Road to A’. They are tasked with completing a long journey for the sovereign credit rating: from BB- as recently as 2009, through BBB+ today, to achieving an A rating.

The country’s economy has not been this hard hit since the Asian financial crisis. Political instability, global tensions and weak productivity mean the recovery is going to be slow – and painful.

Most governments in Asia have resorted to some form of economic shock therapy, but there is only so much the monetary and fiscal authorities can do.