Indonesia: Merchandise exports growth softens but remains robust in February
Merchandise exports rose 8.6% year-on-year in February, following January’s 12.2% jump and supported by higher oil and non-energy exports. Meanwhile, merchandise imports rebounded 14.9% in annual terms in February (January: -6.6% yoy).
The merchandise trade balance remained unchanged from the previous month, recording a USD 2.0 billion surplus in February (January: USD 2.0 billion surplus; February 2020: USD 2.5 billion surplus). Lastly, the trend weakened, with the 12-month trailing merchandise trade balance recording a USD 23.8 billion surplus in February, compared to the USD 24.3 billion surplus in January.
Commenting on the release, Nicholas Mapa, senior economist at ING, stated:
“In the coming months, exports might sustain their expansion with demand for commodities such as iron and steel likely to accelerate in line with expectations for faster global growth. A continued improvement in export trends will bode well for Indonesia’s growth prospects as manufacturing activity improves, which in turn would help offset job losses during the pandemic. Meanwhile imports, which finally recorded an expansion after an extended slump, may also sustain their growth as the economy gradually recovers after last year’s contraction. The bounce in imports can be traced to an increase in inbound shipments of capital goods (machinery and electrical equipment) suggesting that investment outlays me be returning. If these trade trends continue, we can expect a positive boost to economic recovery prospects in the coming months as the economy aims to exit its ongoing recession as soon as 2Q 2021. Meanwhile, a strong showing for exports coupled with a modest gain in imports may continue to provide a trade surplus that would be supportive for IDR in the near term, and partially offset recent pressure induced by the sharp adjustment in global bond yields.”