Indonesia: Indonesia records small trade surplus in August; exports and imports shrink
According to Statistics Indonesia, the country recorded a trade surplus of USD 0.1 billion in August, contrasting July’s USD 0.1 billion deficit and a significant improvement from the USD 1.0 billion deficit recorded in August 2018. August 2019’s reading slightly undershot market expectations of a USD 0.2 billion surplus.
August’s print came amid ongoing sharp falls in exports and imports (-10.0% year-on-year and -15.6% yoy respectively). The decline in exports was due to contractions in energy and non-energy exports—with the latter coming amid lower coal and palm oil shipments—and can likely be linked to ebbing global economic momentum and trade war fears. The steep drop in imports can be attributed to lower oil prices and government policies to limit imports.
While exports and imports will likely remain weak in coming months, both should recover somewhat next year on a more supportive base effect. Moreover, in the case of imports, capital goods imports could ramp up as part of the government’s infrastructure drive.