Trade Surplus to Continue in September-21
September-21 international trade data would be announced on Friday (10/15/21). We foresee, trade balance surplus to continue. Exports value is expected to hit USD20.58bn (+57.67% YoY). Meanwhile imports is likely to jump to USD16.89bn (+45.95% YoY). As a consequence of higher exports growth offsetting imports jump, Indonesia will experience another trade surplus of around USD3.70bn.
Indonesia’s major exports destination countries such as China, U.S., India and Japan economic remained solid and help boosting exports. Rising commodity price particularly energy including coal also benefitting Indonesia as global major producer and exporter.
Improving domestic condition also foster imports growth. A bounce back in manufacturing activities, strengthening consumer sentiment and gradual recovery in public mobilities were among the catalyst of imports growth in September-21.
We expect with additional surplus of USD3.70 will bring Jan-Sep 2021 trade balance to record a surplus of USD22.87bn. With this development, overall trade surplus in 2021 will be higher than FY20 which only reported a surplus of USD21.62bn.
2021 International Trade Review
Indonesia exports value during Jan-Aug 2021 totaled USD142.01bn (+37.77% YoY). Non O&G exports value contributed to more than 94% of total exports. The share of animal & vegetable fats to total Non O&G exports was at 15.39% in the first eight months of 2021. Meanwhile at the same time, mineral fuel exports value shared 13.41% from the pie. Both coal and CPO price soared mainly due to increasing global demand amid supply chain disruption. Exports value from O&G industry and mining sectors as well as manufacturing products drove exports higher.
From Jan-Aug 2021, imports value rose to USD122.83bn (+33.36% YoY). Rising imports value was driven largely by imports of raw materials which saw the highest growth (+36.84% YoY) and the largest contributor of all import value compared to imports of consumer products and capital goods which accounted only 24.39%. Surging imports was a good sign that Indonesia economy has strengthened.
However the trend was exports values and growth outpacing imports causing a 16 straight months of trade surplus since May-20. With this in mind, we expect that Indonesia current account balance would likely to narrow in 2021. We forecasted 2021F CAD for Indonesia is at -1.03%GDP. In addition, FX reserves position stood at an all time high of USD146.9bn as of September-21 and was attributable to solid exports performance and improving tax receipts as well as government withdrawal of foreign debts.
Disclaimer
