Indonesia: Is the trade surplus set to narrow gradually? – UOB

Indonesia faces the prospect of a wider current account deficit and greater external volatility over the medium term, according to a report highlighted by UOB’s Enrico Tanuwidjaja. The country nevertheless maintained a sizeable trade surplus of USD 3.36bn in September, as exports increased 11.9% year-on-year and imports climbed 18.4%. Tanuwidjaja points to resilience in manufacturing and commodity exports, while linking the faster pace of import growth to domestic demand and investment.

Are Indonesia’s Trade Buffers Set 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."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)