Indonesia’s trade surplus surprised markets in October – UOB

Economist at UOB Group E.Tanuwidjaja reviewed the latest trade data from Indonesia.

Key Quotes

“Indonesia’s trade balance unexpectedly swung back to surplus in October at USD161.3mn, well exceeding market consensus (Bloomberg) of USD300bn deficit; the surprise surplus was driven by steep drop in import and better-than-expected exports’ performance. The figure marked a turnaround from the revised trade deficit of USD163.9mn in September. Despite the positive result, Indonesia needs to remain vigilant as the recent dip in imports, especially the decline in raw materials and capital goods, could suggest weakening domestic demand which may portend downside risk to the overall economic activity”.

“Year to date, Indonesia’s trade balance booked a USD1.8bn deficit in the ten months from January-October, which was approximately one third of the USD5.5 billion deficit seen in the same period last year. This suggests that a narrower current account deficit (CAD) may be seen for 2019. We are keeping our CAD forecast of -2.8% of GDP this year”¦ although risks remain for a wider-than-expected CAD given the external uncertainties such as the ongoing US-China trade tensions and down trend in commodity prices, even as we are cautiously hopeful about a rebound in investment spending following President Joko Widodo’s second term inauguration and cabinet announcement”.