Indonesia: Positive prospects remain in place for the trade balance – UOB

Economist Enrico Tanuwidjaja at UOB Group and Haris Handy assessed the recent trade balance figures in Indonesia.

Key Quotes

“Indonesia posted another month of trade surplus of USD2.4bn in September 2020, widened from August's USD2.3bn with imports falling faster than the projected drop in exports. This marked a fifth straight month of trade surplus since May 2020. Exports in September fell at a slower pace by 0.5% y/y vis-à-vis August’s -8.1% (revised figure)… Meanwhile, imports dropped by 18.9% y/y in September vs. -24.2% in the previous month as imports of consumer goods contracted deeper (September’s -20.4% y/y vs August -12.5%). Nevertheless, imports grew by 7.7% on a month-on-month basis, given higher imports of capital goods (September’s +19.0% m/m vs August -8.8%), notably from Japan and China.”

“From January to September of this year, Indonesia booked a USD13.5bn trade surplus which was significantly higher than the USD1.9bn deficit recorded over the same period last year. Going forward, exports may continue to rise moderately on the back of a global economic recovery. In consequence, this may continue to improve Indonesia’s trade balance this year, thus improving the current account which will be positive to support the IDR.”