Indonesia: Trade surplus poised to narrow gradually – UOB

Indonesia recorded a sizeable trade surplus of USD 3.36bn in September, as exports rose 11.9% year-on-year and imports increased 18.4%, according to UOB’s Enrico Tanuwidjaja. Manufacturing and commodity exports remained resilient, he notes, although growth in imports was stronger, supported by domestic demand and investment. In the report’s assessment, these developments suggest a wider current account deficit and greater volatility in the external environment over the medium term.

Indonesia’s trade buffers expected to narrow

"While the recent trade surpluses are encouraging, they do not signal a return to the exceptionally large and persistent surpluses seen during 2021–2025."

"However, the simultaneous acceleration in imports reflects strengthening domestic demand and points to a gradual moderation in external surpluses going forward."

"While recent trade outcomes point to a more balanced external position, the underlying trend continues to suggest a gradual narrowing of Indonesia's external buffers as domestic demand improves and investment-related imports rise."

"Consequently, Indonesia's current account balance is likely to remain in deficit over the coming quarters."

"The trend remains consistent with an expectation of a wider current account deficit and a more volatile external environment over the medium term."

(An artificial intelligence tool assisted in producing this article, which was reviewed by an editor. Find out more.)