JAKARTA: Indonesia booked its smallest trade surplus in nine months in February as imports came in stronger than expected, while exports slumped, reinforcing expectations the surplus could narrow further this year.
Indonesia’s trade surplus last month was around $870 million, data from the statistics bureau showed on Friday, below the $2.32 billion expected by economists polled by Reuters and January’s $2 billion surplus.
The February surplus was the smallest since May 2023.
A drop in commodity prices and slowing global economic growth last year pressured the resource-rich country’s external balance.
This year, exports may also have been affected by delays in the government’s issuance of mining permits, which have disrupted activities in coal, nickel and tin mines, among others.
In February, exports dropped 9.45% from a year earlier to $19.31 billion, more than the 6.5% predicted in the poll.
Indonesia 2023 exports fell 11.33%
Shipments of Indonesia’s biggest export products, coal and palm oil, were down 18.7% and nearly 40%, respectively, year-on-year by value.
“One of the reasons for the drop in crude palm oil exports is falling demand in buyer countries.
With a new trade avenue opened, a number of European countries have access to sunflower oil and other seed oils with cheap prices,“ said acting head of the statistics bureau, Amalia Adininggar Widyasanti.
Also, Amalia said, China and India have high stocks of the edible oil.
By volume, February crude palm oil exports fell 32.5% from a year earlier to 1.42 million tonnes, according to bureau data.
Imports were worth $18.44 billion in February, up 15.84% from a year earlier, against market expectations for a 9.3% increase, with the biggest rise recorded for imports of machinery, plastic and electrical equipment.
Rice imports, aimed at addressing a domestic supply shortage because early-year harvests were hit by prolonged dry weather, also affected the overall imports.
February’s higher-than-expected import figure might be temporary, reflecting that local producers were stocking up ahead of the Muslim fasting month of Ramadan, which started this month, said Irman Faiz, economist with Bank Danamon.
Elections in February and an expected transfer of power to a new government in October also impacted trade, DBS Bank economist Radhika Rao.
“Front-loading in investments ahead of the political transition, pre-festive demand and higher cereal purchases likely lifted total imports, narrowing the trade surplus,” Rao said.
“This sets the stage for modest widening in the current account gap this year.”
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