Indonesia: Trade surplus sustained by lower imports – UOB

UOB Group’s Economist Enrico Tanuwidjaja and Haris Handy assessed the latest trade balance figures in Indonesia.

Key Quotes

“Indonesia posted USD2.1bn surplus which reversed an earlier USD372.1mn deficit (revised figure) in the previous month. Imports declined more sharply than exports amid weaker domestic demand due to the coronavirus (COVID-19) containment measure, more than offsetting the impact of falling exports to the overall trade balance.”

“May’s imports contracted by 42.2% y/y vs. -18.6% in April, underpinned by the imports declined in all types of goods, i.e. consumer goods, raw-auxiliary goods, and capital goods (contracted by 39.8%, 43.0%, and 40.0% respectively). Meanwhile, exports also declined by 28.9% y/y in May vs. -7.2% in April in the light of sluggish global demand for Indonesia’s two main commodities, coal (HS-27) and crude palm oil (HS-15), as well as diminishing demand in non-basic items e.g. jewelry/gems (HS-71). From January to May of this year, Indonesia booked a USD4.3bn trade surplus which was significantly higher than the USD2.1bn deficit recorded over the same period last year. In consequence, this may continue to improve Indonesia’s trade balance, thus shrinking the Current Account Deficit (CAD) this year.”