Indonesia exports continue to dip on slowing global growth; trade in surplus

16, Jul. 2019

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JAKARTA, NNA – Indonesian exports fell 9.0 percent in June, marking the eighth consecutive month of year-on-year declines amid slowing global growth, data from Statistic Indonesia released Monday showed.

Key points:

―― Exports dipped 9.0 percent to $11.78 billion in June, led by lower shipments of mineral fuels, a marginally bigger drop than in May. Exports slumped 20.5 percent from May. In the first six months of the year, exports decreased 8.6 percent to $80.32 billion.

―― Excluding oil and gas, Indonesia’s exports to China, its largest market, totaled $1.82 billion. Exports to the United States came to $1.08 billion and those to Japan were $1.02 billion. Shipments to the three economies accounted for 35.5 percent of the total.

―― Imports rose 2.8 percent from a year earlier to $11.58 billion for the first y/y gain in six months while falling 20.7 percent from the previous month. Imports were down 7.6 percent y/y to $82.25 billion in the first half of 2019.

―― In June Indonesia posted a trade surplus of $200 million, the fourth this year. It narrowed from surpluses of $1.67 billion in June 2018 and $220 million in May 2019.

―― Statistics Indonesia head Suhariyanto told a news briefing that both exports and imports declined in June from May because the first nine days of the month were part of the extended Idul Fitri holiday, pushing down production and trade.

Takeaway:

―― Economists expect the Indonesian government and central bank to maintain their accommodative macro-economic policy stance to support modest annual growth of around 5 percent amid a slump in commodities prices and the drag from the U.S.-China trade dispute.

―― Last month, Bank Indonesia maintained the key interest rate for the seventh time, after raising it to 6 percent in November last year. At the same time, it used another policy tool to support economic growth amid lower global demand, requiring lenders to hold less cash reserves. The central bank said after the June meeting that it was “considering” a rate cut while monitoring global financial markets and external risks.