Indonesia: Merchandise exports decrease in October
Merchandise exports plummeted 10.4% year on year in October, on the heels of September’s 16.1% plunge. That said, October’s result marked the smallest decline since May 2023. Meanwhile, merchandise imports contracted 4.9% on an annual basis in October (September: -11.6% yoy), marking the strongest result since May 2023.
As a result, the merchandise trade balance improved from the previous month, recording a USD 4.7 billion surplus in October (September 2023: USD 4.0 billion surplus; October 2022: USD 6.4 billion surplus). Lastly, the trend deteriorated, with the 12-month trailing merchandise trade balance recording a USD 51.0 billion surplus in October, compared to the USD 52.7 billion surplus in September.
Analysts at the EIU commented on the outlook:
“We forecast that Indonesia’s goods trade surplus will narrow but remain wide by historical standards in 2024-25, as high shipment volumes of commodities partially offset the decline in global commodity prices. […] Indonesia will attempt to reduce its trade reliance on China by pursuing free-trade agreements elsewhere; negotiations with the US are under way to reach a limited trade agreement by 2024 […], so that Indonesian businesses can benefit from tax credits under the US Inflation Reduction Act.”
Enrico Tanuwidjaja and Agus Santoso, economists at UOB, expect a wider trade surplus ahead:
“Going forward, we expect that Indonesia will continue its trend of trade surplus, given that demand from major trading partners such as India and the US remains solid, although on the other hand, exports to China remained in contraction. The operation of several minerals smelters in early 2024, coupled with imports growth that was expected to have peaked in 2Q23 will likely drive a wider trade surplus going forward.”