JAKARTA- Indonesia’s trade surplus may have narrowed to $3.93 billion last month due to weakening export performance as global trade activity slows, according to economists polled by Reuters.
Southeast Asia’s biggest economy booked a larger-than-expected trade surplus of $5.09 billion in June on the back of palm oil exports resuming after a three-week ban was lifted in May.
The median forecast of 12 analysts in the poll was for exports to show growth of 29.73 percent on a yearly basis in July, down from June’s 40.68 percent.
July imports were seen rising 37.30 percent on an annual basis, compared with June’s 21.98 percent increase.
Bank Mandiri economist Faisal Rachman, who estimated July’s surplus at $3.85 billion, said export performance weakened amid slowing global trade activity and with the drop in coal and crude palm oil prices from a month earlier.
“Commodity prices continue to support export performance, yet the fear of global recession is a downward pressure on the prices,” he said, adding that imports have caught up with exports thanks to a recovering domestic economy.
Indonesia booked a larger-than-expected trade surplus of $5.09 billion in June, as palm oil exports surged after the lifting of an export ban a month earlier while coal shipments to Europe also jumped, official data showed on Friday.
A Reuters poll had expected a $3.52 billion surplus for June, following a $2.90 billion surplus in May.
Resource-rich Indonesia has been enjoying an export boom on the back of soaring global commodity prices. Its trade surplus in 2022’s first half was the highest on record at $24.89 billion, more than double that of the same period in 2021.
June exports rose 40.68 percent on a yearly basis to $26.09 billion, beating the poll’s 30.26 percent growth forecast, Statistics Indonesia data showed.
Palm oil and its derivatives contributed $2.74 billion to total shipments amid high global prices, up more than 860 percent from last month, with a big increase in sales to India, Pakistan, Bangladesh and China. That was a rise of 89 percent on an annual basis.
Indonesia banned exports of some palm oil products for three weeks from late April.
Its coal exports to Europe have also increased as the impacts of the Ukraine war disrupted Russian coal supply to the region. Data showed $191.2 million in coal exports in the second quarter, up 143 percent from the previous quarter. No monthly data was provided.
Imports rose 21.98 percent on an annual basis to $21 billion, with the biggest increase from purchases of raw materials and industrial machinery. The poll had expected 20.10 percent growth.
Myrdal Gunarto, an economist with Maybank Indonesia, said the surplus should give the central bank confidence to keep interest rates unchanged at next week’s policy meeting as it provided “monetary ammunition” for them to stabilise the financial markets.
Bank Indonesia, one of the world’s least hawkish central banks, has kept interest rates at pandemic-era record lows. Central banks of Singapore and the Philippines this week tightened their monetary policy in off-cycle moves to address rising inflation.
“Considering the high June trade surplus and with core inflation still under control, below 3 percent, BI is expected to keep the benchmark rate at 3.5 percent, even though the Fed potentially will hike by 75 bps this month,” Bank Permata economist Josua Pardede said, referring to U.S. monetary tightening expectations. — Reuters
