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Bank Indonesia targets the current account deficit between 2% and 2.5% of GDP for this year.
Bank Indonesia targets the current account deficit between 2% and 2.5% of GDP for this year.

Indonesia Deficit May Widen

Indonesia Deficit May Widen

Bank Indonesia, the country’s central bank, estimates that the current account deficit will widen to 2.1% of gross domestic product from 1.7% last year, due to the continued deficit in international trade activity, the bank’s governor said.

“It is due to the large imports of raw materials that will be used for production in Indonesia in 2018,” Bank Indonesia governor Agus Martowardojo told reporters, adding that there will be a trade balance deficit of $230 million in February. Antara reported.

The current account records all international trades of goods and services, as well as income transfers, debt payments and remittances. That could place Indonesia’s currency, rupiah, in a more vulnerable position should the country fail to attract fresh investments or debts to plug the deficit.

The Central Statistics Agency reported that the trade deficit in January stood at $670 million, as imports increased by 26% on an annual basis, much faster than the 7.9% increase in exports.

In January, imports of consumer goods, capital goods and raw materials showed double-digit growth on an annual basis, at 33%, 31% and 25%, respectively.

Last year, the current account, or the broadest record of a country’s trade in international goods and services, as well as in remittances and its investment income, recorded a deficit of $17.29 billion, equal to 1.7% of gross domestic product. In 2016, the current account deficit stood at $16.95 billion, equivalent to 1.8% of GDP.

“We will maintain the current account deficit at a healthy level,” Agus said.Bank Indonesia targets the current account deficit between 2% and 2.5% of GDP for this year.

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