January 2021 Trade Data Brings Renewed Concerns Over Indonesia’s Import Performance
Indonesia started the year with another comfortable trade surplus. In January 2021 the country posted a trade surplus of USD $1.96 billion. Since May 2020 Indonesia has been recording an impressive series of big trade surpluses, each month. This is a positive matter for the country’s current account balance and the rupiah rate (and thus also supports risk appetite in the capital markets).
However, to quote English playwright William Shakespeare: "all that glitters is not gold". Ever since the beginning of the COVID-19 crisis in Indonesia (starting around March-April 2020), Indonesia Investments has emphasized that the significant drop in imports into Indonesia is quite alarming. Ideally, an increase in non-oil and gas exports (especially processed high value goods) is what triggers a surplus. However, in the case of Indonesia the recent wide trade surpluses are primarily caused by the collapse of imports (involving capital goods, raw materials, and consumer goods).
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