Indonesia trade surplus narrows to US$2.4 billion in November, misses expectation

INDONESIA’S trade surplus narrowed in November to US$2.41 billion as imports increased more than expected, while exports extended their weakening trend, data from the statistics bureau showed on Friday (Dec 15).

South-east Asia’s biggest economy has seen its shipments declining by value in the past months due to falling commodity prices and slowing global demand.

In November, exports fell 8.6 per cent on a yearly basis to US$22 billion, versus expectations of a 9.4 per cent drop in a Reuters poll.

Shipment of Indonesia’s coal and palm oil, which are its top commodities, were down 34.3 per cent and 12.6 per cent on an annual basis, respectively, as prices continued to weaken in November.

Total volume of coal and crude palm oil exports in November were at 33.9 million tonnes and 2.5 million tonnes, respectively.

Imports, on the other hand, were up 3.3 per cent on a yearly basis to US$19.59 billion, much higher than the prediction in the poll for only a 0.2 per cent increase.

The imports were boosted by rising purchases of consumer and capital goods, up 19.8 per cent and 13.66 per cent, respectively. Meanwhile, imports of raw materials were down 1.1 per cent.

“Higher imports in consumer goods was driven among others by imports of food commodities,” Pudji Ismartini, deputy head of Statistics Indonesia, said on Friday.

Indonesia imported 433,000 tonnes of rice in November, up from 312,000 tonnes in October, followed also by higher imports of sugar and corn in the same month, the bureau’s data shows.

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The government has been trying to keep headline inflation low by ensuring sufficient food supply partly supported by imports.

Last month, Indonesia’s annual inflation rate accelerated more than expected to 2.9 per cent due to rising food prices, including rice. However, the inflation rate is still within Bank Indonesia’s (BI) target range for 2023 at 2 to 4 per cent.

Irman Faiz, Bank Danamon’s economist, said the November trade balance is still inline with his expectation of a narrowing surplus in the future, and maintained his forecast for a current account deficit at 0.4 per cent of GDP this year.

“The current account deficit continues to stay below the historical average, providing a buffer for rupiah from portfolio flows pressure. As a result, we expect BI to keep the policy rate at 6 per cent until the Fed decides to pivot,” he said.

BI’s next policy review is on Dec 21, where expectations are for rates to be kept steady again following last month’s on-hold decision. REUTERS