Economist Enrico Tanuwidjaja and Yari Mayaseti at UOB Group comment on the latest trade balance results in Indonesia.

Key Takeaways

“Indonesia’s trade surplus narrowed slightly to USD4.4bn in September vs. USD4.7bn in the previous month (albeit less than expectations of USD3.8bn), amidst slower pace of imports, notably for capital goods. Imports slowed to 40.3% y/y in September vs. 55.3% in August, vs. 50.0% forecast. Meanwhile, exports slowed to 47.6% y/y in September vs. 64.1% in the previous month, vs. market consensus of 51.6% due to the slower exports in manufacturing sector as well as lower exports in agriculture.”

“From January to September this year, Indonesia booked USD25.1bn of trade surplus which was significantly higher than the USD13.4bn surplus recorded over the same period last year. If the commodity prices remain high, exports could sustain their solid expansion to keep the trade surplus at an elevated level. This certainly will help to push the current account deficit (CAD) to a narrower position this year despite the rebound in imports (due to higher domestic demand) and higher primary income deficit. This should provide more support to Indonesia external resiliency. It also remains a possibility for Indonesia to even run current account surplus in the third quarter of 2021 (or even this year). Indonesia has been recording a trade surplus since May 2020 (17-month running and may continue so), and for 2021 to-date, a cumulative trade surplus of USD21.85bn already exceeded 2020 total trade surplus of USD21.74bn.”