Posted on 19 Aug 2015
Indonesia shipped $11.4 billion worth of goods in July, a fall of 19 percent from a year ago, while imports dropped by 28 percent to $10.1 billion, according to the Central Statistics Agency (BPS). This was the eighth consecutive month in which the country posted a surplus, with a slowing domestic economy underpinning weak demand for imports.
GDP grew by 4.67 percent in the second quarter of the year from the same period last year – the slowest pace since 2009 – as weak commodity prices and sluggish government spending hit domestic purchasing power and investment. The government is targeting GDP growth of between 5 percent and 5.2 percent this year, and a 5.5 percent next year.
“The trade balance has continued to report a surplus this year due to lower year-on-year imports rather than better export performance,” said Eric Sugandi, a Jakarta-based economist at Standard Chartered Bank.
“It may show the economy is slowing in July, especially in regards to investment figures,” he added.
In July, imports of machinery and other mechanical equipment fell by 24 percent to $470 million, contributing to a 16 percent drop in capital goods imports. Raw material imports – ranging from plastics and chemicals to steel and spare parts, on which local manufacturers are reliant – fell by 20 percent. Imports of consumer goods, including smartphones, laptops and books, also drop by 14 percent.
“The surplus, in a way, can reduce the current-account deficit in the third quarter, depending on the numbers in August and September,” Eric said.
He added this could take some pressure off the rupiah, which has lost 11 percent of its value against the US dollar since the start of the year.
The rupiah was down 0.5 percent at 13,831 against the US dollar on Tuesday. The stock market was down 0.9 percent at 4,542.74 at the lunch break on Tuesday following the announcement of the trade data.
