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UOB Group’s Economist Enrico Tanuwidjaja and Haris Handy reviewed the latest trade balance figures in Indonesia.

Key Quotes

“Indonesia posted trade surplus of +USD2.1bn in December 2020, narrowed from November’s +USD2.6bn, as imports grew faster-than-expected by +14.0% m/m. Both exports and imports surged to their highest figure in a year. Exports grew by +14.6% y/y in December to USD16.5bn (vs. November’s +9.5%) following higher exports volume and price of Indonesia’s main commodities i.e., palm oil and coal. Meanwhile, Imports contracted less to USD 14.4bn, at -0.5% y/y in December (vs. November’s -17.5%), driven by higher imports of consumer and capital goods, indicating an uptick in domestic economic activity.”

“Entire year of 2020, Indonesia had a total trade surplus of +USD21.7bn, which is almost double the latest trade surplus in 2016 of +USD11.8bn and significantly higher than -USD3.6bn deficit seen in 2019. FY2020, exports decreased by -2.3% while imports fell deeper by -17.1%. Combinations of factors, such as lower global and domestic demand due to limitation of economic activities to contain COVID-19 spread, have put some pressure to Indonesia exports and imports performance.”

“The performance suggests that a significant narrower current account deficit (CAD) may be seen for 2020, in line with our CAD forecast of around -0.7% of GDP (vs. 2019’s -2.7%). For 2021, the pace of the CAD remained measured with our forecast at -2.0% of GDP; in light of higher imports due to gradual recovery in domestic demand, coupled with wider primary income deficit.”