Indonesia: Merchandise exports contract at softer pace in August
Merchandise exports sank 8.4% in annual terms in August, following July’s 9.9% fall. Meanwhile, merchandise imports plummeted 24.2% on an annual basis in August (July: -32.6% yoy). As a result, the merchandise trade balance deteriorated, recording a USD 2.3 billion surplus in August (July: USD 3.3 billion surplus). Lastly, the trend pointed up, with the 12-month trailing merchandise trade balance recording a USD 9.5 billion surplus in August, compared to USD 7.3 billion surplus in July.
Looking ahead, export and import performance should gradually improve as the global recovery takes place and amid a supportive base effect, although the outlook is highly uncertain.
Regarding the outlook, Euben Paracuelles and Rangga Cipta, economists at Nomura, commented:
“We reiterate our full-year 2020 current account deficit (CAD) forecast of 2.1% of GDP from 2019’s 2.7%, but acknowledge a rising risk that the CAD will be narrower following Jakarta’s? decision to reimpose large-scale social restrictions (PSBB). We believe domestic demand will likely be dampened particularly if other big cities also reimpose PSBB and these measures are put in place for an extended period. On the export side, we still envisage a likely widening trajectory of the CAD in the second half 2020, as we expect exports to remain weak, consistent with our global growth forecasts and slower growth in Indonesia’s main trading partners.”