Indonesia: Trade balance records largest surplus in over two years
February 1, 2014
Exports expanded 10.3% over the same month of the previous year in December. The result greatly contrasted the 2.3% contraction observed in November and marked the largest expansion since October 2011. Non-oil and gas exports, which account for the majority of Indonesian shipments, increased 9.3% in December (November: -3.1% year-on-year). Oil and gas exports increased 14.8% (November: +1.8% yoy).
Meanwhile, imports contracted 0.8% in December, which was up from the hefty 10.5% decrease recorded in November. Subdued demand due to high import costs associated with a weak rupiah are partially responsible for falling imports.
As a result of the substantial growth in exports and the contraction in imports, the trade balance surged to a USD 1.5 billion surplus in December, which nearly doubled the USD 789 million surplus registered in November and contrasted the USD 188 million deficit recorded in the same month of the previous year. This marked the largest trade balance since November 2011. The result came as a surprise to the market, which had only expected the trade balance to reach a USD 729 million surplus. In the full year 2013, however, the trade balance deficit widened to a record USD 4.1 billion, following the USD 1.7 billion deficit registered in 2012.
FocusEconomics Consensus Forecast panelists expect exports to expand 4.5% and the trade deficit to reach USD 3.4 billion in 2014. For 2015, the panel expects exports to grow 8.8% and the trade balance to rebound a to USD 5.9 billion surplus.
Author: Carl Kelly, Economist