World Economy

Indonesia Shows Trade Surplus, But Imports Plunge

Indonesia Shows Trade Surplus, But Imports PlungeIndonesia Shows Trade Surplus, But Imports Plunge

Indonesia’s trade balance booked its fourth straight month of surplus in April, while the current-account deficit improved in the first quarter as imports plunged along with the country’s slowing economy.

The country booked a $454.4 million surplus in April, as imports dipped 22 percent to $12.63 billion during the month from the past year, Yonhap quoted the Central Statistics Agency (BPS) as reporting.

Exports also dropped, albeit at a more moderate level at 8.46 percent to $13.08 billion on a yearly basis, caused by a 45 percent fall in oil and gas exports to $1.46 billion amid low global oil prices.

Slower imports were seen across some sectors — raw materials, intermediary goods and capital goods. Imports of machinery and mechanical equipment suffered the most, slumping by 186 percent to $1.87 billion from the past year.

Overseas purchases of vehicles and auto parts also fell steeply by 80.8 percent to $469.4 million in line with the weak domestic sales of four-wheelers and two-wheelers.

Sales of cars and motorcycles, both an indicator of domestic consumption, shrank sharply in the first quarter by 14.05 percent to 282,345 units and by 19.10 percent to 1.61 million units, respectively.

The economy, which is more than 50 percent driven by domestic consumption, saw its growth shrinking to 4.7 percent in the first quarter of this year, a level unseen since 2009.

“If economic growth continues to drop, imports will continue to slow down […] the current account will be manageable,” Bank Indonesia (BI) statistics department director Endy Dwi Tjahjono said. “If the economy picks up, the current-account deficit will increase because imports will be first to rise.”

BI reported narrowing the current-account deficit — the nation’s broadest measure of external balance and a major worry among investors that put the rupiah under pressure in the previous year — in the first quarter of this year to 1.8 percent of gross domestic product (GDP) from 2.6 percent in the previous quarter.

“The improvement in current-account performance was primarily driven by an improvement in the oil and gas trade balance as oil imports dropped due to low global oil prices and a drop in fuel consumption as a positive impact from the government’s subsidy reform,” the central bank said.