Indonesia: Trade balance returns to deficit, exports constrained by government ban
March 3, 2014
Exports contracted 5.8% over the same month last year in January. The result greatly contrasted the 10.2% expansion observed in December. Non-oil and gas exports, which account for the majority of Indonesian shipments, also decreased 5.8% in January (December: +9.1% year-on-year). The steep decline in exports was driven by a government ban on mineral and ore shipments. Oil and gas exports fell 5.9% (December: +14.8% yoy). Meanwhile, imports contracted 3.5% in January, which followed the 0.8% decrease recorded in December.
As a result of the substantial drop in exports, the trade balance swung from a USD 1.5 billion surplus in December to a USD 431 million deficit in January. The result was nearly six times the USD 75 million deficit recorded in the same month last year and marked a return to deficit after three consecutive months of a positive and widening surplus. The result came as a surprise to the market, which had expected the trade balance to decline but to stay in the black at a USD 421 million surplus. Moreover, the 12-month moving sum of the trade balance posted a shortfall of USD 4.4 billion, which was wider than the USD 4.1 billion deficit observed in December.
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