JAKARTA- Indonesia’s current account swung into deficit for the first time in two years in the second quarter due to falling commodity prices and weak global growth, the central bank said on Tuesday, with expectations that the deficit will be higher next year.
Having posted a $6.5 billion balance of payments surplus in the first quarter, Indonesia showed a $7.4 billion deficit in the April-June quarter.
Bank Indonesia (BI) blamed portfolio outflows related to global market uncertainties for the payments deficit, which was not unexpected for the market, as foreign exchange reserves data had given forewarning of the way flows had turned.
Worsening external balances could further pressure the rupiah currency which has weakened against the US dollar in recent weeks amid rising US Treasury yields and signs of weakness in China’s economy.
The second quarter current account deficit was equivalent to 0.5 percent of gross domestic product, BI data showed.
Addressing a seminar, BI Governor Perry Warjiyo said Indonesia is now expected to run a current account deficit within a range of 0.5 percent to 1.3 percent of GDP in 2024.
For this year, BI has forecast the current account would range between a 0.4 percent deficit to a 0.4 percent surplus.
The April-June quarter current account deficit of $1.9 billion came after Southeast Asia’s largest economy booked a $3 billion surplus in the first quarter, which was equivalent to 0.9 percent of GDP.
Before this, the last time Indonesia had recorded a quarterly current account deficit was in the second quarter of 2021.
The resource rich country had been enjoying an export boom in 2021 and 2022 on rising global commodity prices. But shipments this year have slowed as prices of its top products, including coal and palm oil, plunged.– Reuters
