Indonesia’s trade surplus reaches $3.56b in April

Indonesia’s trade surplus in April came in slightly higher than forecasts at $3.56 billion, but concerns linger as exports continue to weaken, Reuters reported on Wednesday, citing statistics bureau data.

While the surplus exceeded expectations and marked a first year-on-year export increase in 11 months, it reflects smaller-than-estimated imports rather than a significant export rebound. Economists had anticipated a $3.30 billion surplus.

Indonesia, Southeast Asia’s largest economy, has enjoyed a merchandise trade surplus for four years straight, but the gap is narrowing due to declining commodity prices and sluggish global trade.

Coal, the nation’s top export, saw a significant drop in value despite rising volumes, highlighting the impact of falling global prices. Overall, April’s export growth of 1.72 per cent fell short of the 4.57 per cent forecast.

Despite the trade slowdown, imports also grew at a slower pace than expected to 4.62 per cent compared to 8.69 per cent forecast), contributing to the surplus.

This data supports Bank Permata economist Josua Pardede’s prediction of a moderately widening current account deficit for Indonesia in 2024.

Pardede believes the central bank (BI) will likely maintain its current benchmark rate at 6.25 per cent at its upcoming policy meeting next week. Stable inflation and a stabilised rupiah exchange rate are cited as key factors for this stance.

While BI delivered a surprise rate hike in April to bolster the rupiah, Governor Warjiyo recently indicated further hikes may not be necessary as capital inflows have resumed.

(1 United States dollar = 16026.00 Indonesian rupiah)