Trade Balance: Small Trade Surplus in September, Start of Recovery?
Based on the latest data from Indonesia’s Statistical Agency (BPS), Indonesia recorded a USD $227.1 million trade surplus in September 2018. Although it is a very small surplus, it did lead to some optimism. After all, Indonesia had recorded big monthly trade deficits of USD $2.0 billion and USD $944.2 million in July 2018 and August 2018, respectively.
For example, Indonesian Finance Minister Sri Mulyani Indrawati commented on the latest trade data saying the government is content to see the latest developments regarding the trade balance, and especially content to see the non-oil & gas balance remaining in surplus.
Traditionally, Indonesia’s non-oil & gas balance shows a big surplus every month, while the oil & gas balance shows a major deficit. However, so far in 2018 there have been three months in which Indonesia's non-oil & gas balance showed a deficit (USD $517.6 million in April 2018, USD $235.8 million in May 2018, and USD $778.2 million in July 2018).
Although this development was particularly attributed to massive imports of capital goods and raw materials into Indonesia (which signals rising investment and rising production activity, hence a positive signal) it did lead to concern, especially related to the widening current account deficit and the fragile rupiah which has depreciated around 10 percent against the US dollar so far in 2018).
However, despite the positive development in September 2018, Indrawati added that there remains a significant deficit in the country’s oil & gas balance.
A closer look at the BPS data shows that Indonesia's USD $227.1 million trade surplus in September 2018 is particularly caused by sliding imports and not so much by improving exports. In fact, Indonesia's exports also fell in September, albeit not as steep as the decline in imports.
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Read the full article in the October 2018 edition of our monthly research report. You can purchase this report by sending an email to info@indonesia-investments.com or a WhatsApp (WA) message to the following number: +6287884106944
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