Indonesia’s February trade surplus surpasses expectations, but risks loom
Expansion, fuelled by surge in palm oil exports, provides much-needed boost as country aims to break through 5% growth barrier
[JAKARTA] Indonesia recorded a higher-than-expected trade surplus in February, driven by a sharp rebound in palm oil exports following a post-2022 commodity boom slowdown, showed data from its statistics bureau on Monday (Mar 17).
Its trade surplus soared to about US$3.1 billion last month, outpacing Bloomberg’s economist forecast of US$2.2 billion. This extends the country’s streak of consecutive trade surpluses, which has remained uninterrupted since May 2020.
The surge in exports provides the country with a much-needed boost as it seeks to break through the sticky 5 per cent growth barrier, along with the added prospect of a foreign-exchange lift ahead of the dividend season in April.
However, analysts have warned that the global trade outlook remains precarious, with turbulence potentially on the horizon due to the unpredictable path of US trade policy under President Donald Trump.
Josua Pardede, head economist at Bank Permata, has forecast that Indonesia’s current account deficit will widen at a manageable rate this year.
He attributed this to robust domestic demand, fuelled by the government’s pro-growth agenda, which is expected to drive up imports. At the same time, exports may struggle due to rising trade war tensions. “We anticipate the current account deficit for 2025 to expand to 1.18 per cent of gross domestic product, as the ongoing trade war is likely to exert an impact moving forward.”
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Exports from the resource-rich nation surged about 14.1 per cent on the year in February, reaching nearly US$22 billion. This was fuelled by a 90 per cent spike in the value of crude and refined palm oil shipments, which soared to US$2.3 billion.
Amalia Adininggar Widyasanti, head of the country’s statistics agency, said that exports of precious metals, jewellery, and nickel saw a solid uptick. This helped to fill the gap left by a nearly 20 per cent drop in coal exports, caused by both falling prices and lower volumes.
South-east Asia’s biggest economy shipped less coal in the first two months of 2025 to key trading partners, with exports to China dropping 18.7 per cent and to India falling 13 per cent.
Meanwhile, Indonesia’s imports in February totalled about US$18.9 billion, marking a 2.3 per cent year-on-year rise. In particular, imports of cars and spare parts jumped 24 per cent compared with last year, reaching US$920 million.
External risks weigh on trade surplus
Fithra Faisal, senior economist at Samuel Sekuritas, pointed out that the sharp rise in exports was likely driven by strong global demand for Indonesian commodities and manufactured goods, coupled with a competitive rupiah.
Looking forward, he cautioned that the sustainability of Indonesia’s trade surplus remains uncertain. External risks and changes in domestic demand could affect trade flows this year.
“While exports have had a strong start this year, challenges lie ahead. Softer global demand from key trading partners such as China, US and Europe could slow export growth, especially in manufacturing and resource-based sectors,” he noted.
Commodity price volatility also presents a significant risk, with fluctuations in global energy and mineral prices potentially affecting Indonesia’s export revenues. He added: “Given these factors, Indonesia’s trade surplus is expected to gradually decline throughout 2025 as we contend with ongoing external risks.”
Trade data will be one of the key indicators that Bank Indonesia will consider when deciding on its interest rate policy on Mar 19.
Analysts suggest that the widening current account deficit may limit the room for a rate cut, given global uncertainties that impact capital inflows.
Bank Permata’s Pardede predicts that by end-2025, the central bank’s rate will hover at 5.75 per cent, with the rupiah expected to range between 16,200 and 16,600 per US dollar.
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