Indonesia: Merchandise exports contract at a steeper pace in October
Merchandise exports fell 3.3% over the same month last year in October (September: -0.8% year-on-year). October’s fall was driven by markedly lower energy exports. Meanwhile, merchandise imports slid 26.9% over the same month last year in October (September: -18.9% yoy), indicative of soft domestic demand.
As a result, the merchandise trade balance improved from the previous month, recording a USD 3.6 billion surplus in October, the highest reading in nearly a decade (September 2020: USD 2.4 billion surplus; October 2019: USD 0.1 billion surplus). Lastly, the trend improved, with the 12-month trailing merchandise trade balance recording a USD 15.6 billion surplus in October, compared to the USD 12.1 billion surplus in September.
Looking to next year, both exports and imports should recover as the impact of the pandemic recedes. The recovery in imports should be sharper than that of exports due to a supportive base effect, which will push down the trade surplus and cause the current account deficit to widen. In the near term though, both exports and imports could be dampened by elevated Covid-19 infections.