Trade Balance – March 2018

•  Indonesia recorded a trade surplus of USD 1.09 bn, the biggest in six months, following three consecutive month deficit as growth in imports moderated more than expected, while exports were stronger.

• Exports in March rose 6.14% (Y/Y) to USD 15.58 bn, sharply weaker than February’s 12.04%. Oil and Gas (O&G) exports tumbled 11.46% (Y/Y) while Non-O&G exports expanded 8.16% (Y/Y) supported by a marked increase in exports of herbs, coffee and corn.

• By volume, exports in March rose 8.10% (Y/Y) with O&G exports declined 18.95% (Y/Y) and Non-O&G exports rose 10.56% (Y/Y). On a monthly basis, exports jumped 12.66% as the growth in Non-O&G exports (+14.29%) was nearly doubled the contraction (-7.26%) in O&G exports.

• China continues to be the main destination for Non-O&G exports with shipments to that country totalled USD 2.36 bn in March or increase 14.39% compared to previous month. Other major export destination includes Japan, USA, India, Singapore and South Korea.

• Cumulatively, exports stood at USD 44.26 bn (+8.78% Y/Y) in 1Q18, underpinned by robust growth of 9.53% in Non-O&G which contributed 90.84% to total exports. O&G exports only rose 1.8% (Y/Y).

• Imports grew just 9.07% (Y/Y), decelerating from February’s 24.94% as O&G imports shrank 0.64% (Y/Y) while Non-O&G imports booked 11% (Y/Y) increase. On a monthly basis, Non-O&G imports from both Japan and the U.S. shot up 17.84% and 25% respectively at a time when Non-O&G imports China fell 17.82%.

• Imports of consumption goods in March fell 12.8% (m-t-m) due to steep appreciation of USD/IDR that started in February. Imports on both raw materials and capital goods reversed its course by rising 2.62% (m-t-m) and 8.99% (m-t-m) respectively following a decline of 7.95% (m-t-m) and 9.20% (m-t-m).

• It was in-line with the Manufacturing Purchasing Managers’ Index (PMI) data which showed that manufacturers raised their purchasing activity to support new orders (domestic and overseas) and to build their inventories to ensure a timely completion of backlog orders. In other word, it implied an upturn in household or domestic consumption as well as export demand.

• For January – March 2018 period, imports reached USD 43.9 bn (+20.12%) compared to the same period last year driven primarily by Non-O&G imports (+23.9%). O&G imports showed lacklustre growth of 2.71% Y/Y), dragged down by Oil Products (-10.6% Y/Y) and Natural Gas (-10.98% Y/Y). Crude oil imports, on the other hand, soared 42.6% (Y/Y).

• Thanks to the big surplus in March, the 1Q18 overall trade balance swung back into surplus (USD 282.8 mn), much lower compared to the USD 4.1 bn surplus in 1Q17. Nonetheless, it lends hope that the Current Account Deficit (CAD) would not exceed 2% of the GDP.