Indonesia: Gradual narrowing ahead for trade surplus – UOB

Indonesia’s trade surplus remained sizeable at USD 3.36bn in September. UOB’s Enrico Tanuwidjaja highlights export growth of 11.9% year-on-year and an 18.4% rise in imports. Manufacturing and commodity exports remained resilient, he notes, while domestic demand and investment drove faster import growth. According to the report, this pattern suggests a wider current account deficit and greater volatility in the external environment over the medium term.

Trade surplus buffers expected to ease

"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.)