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Indonesia Trade Balance November 2019

Indonesia: Exports and imports continue to fall in November, trade balance turns negative

According to Statistics Indonesia, the country recorded a trade deficit of USD 1.3 billion in November, larger than market expectations of a USD 0.1 billion deficit, but smaller than the USD 2.1 billion deficit recorded in the same month of 2018.

Exports and imports continued to decline in November (-5.7% year-on-year and -9.2% yoy respectively), with drivers unchanged from previous months. The decline in exports came on the back of lower oil and gas, and non-oil and gas exports, amid low commodity prices and a challenging external environment. The sharp fall in imports can likely be explained in part by government import substitution policies designed to rein in the current account deficit, as well as muted oil prices.

Regarding the implications of the results for the current account deficit, analysts at Nomura comment: “We maintain our view that the current account deficit will remain on a gradually improving trajectory after narrowing moderately in Q3, mostly due to a larger trade surplus. The November trade data bring the accumulated year-to-date trade deficit to just USD3.1bn, a substantial improvement from the USD8.7bn deficit in 2018.”

Looking forward, exports and imports should return to growth next year on a more supportive base effect, although the recovery is likely to be modest. In the case of imports, capital goods imports could ramp up on stronger infrastructure spending.

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