Despite plummeting exports, Indonesia posts higher-than-expected September trade surplus

[JAKARTA] Indonesia enjoyed a larger than expected trade surplus of US$3.42 billion in September – far exceeding economists’ projections of between US$2.1 billion and US$2.5 billion, and higher than last month’s US$3.12 billion surplus.

This was the 41st straight month that the resource-rich country had recorded a trade surplus, and came even as exports continued to see a sharp decline.

According to data released by the statistics bureau on Monday (Oct 16), Indonesia’s exports amounted to US$20.76 billion in September, a substantial year-on-year decline of 16.2 per cent. This was also the lowest level of exports since May 2010.

Indonesia recorded exports of US$20.76 billion in September due to weakening global commodity prices, a substantial year-on-year decline of 16.17 per cent and the lowest level since May 2010. The mining, coal and crude palm oil sectors were those that took the hardest hits.

Imports, however, have fallen in tandem in recent months, which has caused the trade surplus of South-east Asia’s largest economy to stay relatively high. Imports for September came up to US$17.3 billion, a 12.5 per cent decrease year-on-year.

Despite the trade surplus, officials said Indonesia’s economy faces the twin challenges of diminishing exports and rising food imports.

Amalia Adininggar Widyasanti, the acting head of Statistics Indonesia, said the country is grappling with a significant challenge in the form of a drought caused by El Nino, which has led to a decline in rice production.

She told a press conference on Monday that the national rice production is expected to fall by 10.9 per cent in the fourth quarter of this year to 4.78 million tonnes, from 5.37 million tonnes in the same period in 2022.

Southeast Asia’s largest economy is expected to import rice from various countries, including India and China. These rice imports are projected to bolster consumer goods import figures in the fourth quarter of this year.

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Indonesia’s imports for September totaled US$17.34 billion, marking a 12.45% year-on-year decrease. The import of consumption goods saw the most significant decline, falling by 22.1 per cent month-to-month and 4.74 per cent year-on-year.

A plus point of the ongoing trade surplus is that it offers a much-needed boost to the nation’s foreign exchange reserves, which have been on a declining trend due to interventions by Bank Indonesia to stabilise the value of the rupiah.

Foreign exchange reserves dipped to US$134.9 billion as of the end of September – a fall of US$2.2 billion – as the central bank ramped up its efforts to stabilise the rupiah’s exchange rate amid heavy capital outflows.