Strong exports fostered a larger trade surplus – UOB

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UOB group economist Enrico Tanuwidjaja and Haris Handy comment on the recently released results of Indonesia’s trade balance.

Key quotes

“Indonesia’s exports and imports continue their recent positive performance as the global economy recovers; with China, Indonesia’s key trading partner, playing an important role in supporting both supply and demand. Exports rose 51.9% y / y in April against growth of 30.5% the previous month, supported by higher demand and soaring commodity prices; mainly exports of iron, steel and precious metals. In addition, imports to Indonesia increased 29.9% year-on-year in April from 25.7% in March (the third consecutive month of growth in inbound shipments and the fastest pace since July 2018) attributable to imports. significantly higher consumer goods and crude auxiliary products; despite the slight decrease in imports of 3.0% compared to the previous month, imports of capital goods declined. “

“Overall, this led Indonesia to post another trade surplus of $ 2.2 billion in April, down from $ 1.6 billion the month before. From January to April of this year, Indonesia recorded a trade surplus of USD 7.7 billion, which was significantly higher than the surplus of USD 2.2 billion recorded during the same period last year. The country managed to reduce its current account (CAD) deficit last year, thanks to a stronger recovery in exports, while imports were largely subdued amid weak domestic demand. Nonetheless, we expect the Canadian dollar to widen this year as imports recover further, driven by stronger consumption and increased investment activity. “

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