JAKARTA- Indonesia’s trade surplus is expected to rise in July compared to the previous month as exports were seen picking up amid a recovery in prices of its top commodities while imports were seen slowing down, a Reuters poll showed on Wednesday.
The poll, which surveyed 19 economists between Aug. 7 and Aug. 14, indicated a trade surplus of $2.45 billion for last month, versus a $2.39 billion surplus in June.
The Southeast Asia’s biggest economy has been recording a monthly trade surplus since more than four years, thanks to the strong exports of its commodities, but the surpluses have been narrowing due to weaker global demand.
Bank Permata economist Josua Pardede said exports are seen to rise in July due to higher price for crude palm oil and coal, Indonesia’s top export commodities, higher by 2.6 percent and 1.8 percent month-to-month, respectively.
Economists in the poll predicted exports in July were seen rising to 3.85 percent year-on-year, versus a 1.17 percent growth in June.
Growth of imports was seen slowing in July to 0.04 percent year-on-year, compared to 7.58 percent in June.
Earlier, Indonesia and Japan agreed on amendments to an economic agreement to reduce or remove trade barriers, Indonesia said, predicting the revision will boost bilateral trade.
Japan will further reduce import tariffs on 112 Indonesian items, including fishery products, fruit, food and beverages, Indonesia’s trade ministry said in a statement.
Indonesia will improve market access for 25 Japanese products, including stainless steel and automotive, under the new Indonesia-Japan Economic Partnership Agreement (IJEPA), which is expected to be ratified next year.
Indonesia’s exports to Japan were predicted to surge to $35.9 billion by 2028 in light of the revision, from $20.8 billion in 2023, according to the statement.
The new agreement will include an extension for the term of employment of Indonesian nurses and caregivers in Japan and possible liberalisation of workers’ movements in other professions.
Indonesia’s economic growth probably slowed slightly to 5 percent in the second quarter and authorities are monitoring geopolitical developments that could affect the domestic economy, its finance minister said.
Minister Sri Mulyani Indrawati said household consumption, investment and improving exports had likely driven growth in the April-June quarter. The figure would represent only a slight slowdown from the 5.11 percent annual expansion Southeast Asia’s economy recorded in the first quarter.
“Going forward, we see that the increase in domestic economic activity will continue until the end of 2024,” she said. “From the fiscal side, the execution of the 2024 budget, particularly on the spending side, will be focused on maintaining price stability.”
For all of 2024, Indonesia’s economic growth is expected to be within a range of 5 percent to 5.2 percent, she said.
The minister’s second-quarter estimate is in line with a forecast in a Reuters poll of 24 economists, who pointed to moderating exports and the dampening impact of high interest rates on consumption as factors weighing on growth. The data will be released on Monday.
In a joint press conference with other officials, Sri Mulyani said financial authorities discussed geopolitical developments to anticipate risks that could affect Indonesia’s economy, including tensions in the Middle East, the war in Ukraine and elections in other countries.
