Indonesia recorded another big trade surplus in July 2020. Based on the latest data from Indonesia’s Statistical Agency (BPS), the country's trade surplus reached USD $3.26 billion in July 2020, a huge improvement from the USD $280.1 million deficit it recorded in the same month one year earlier.
Indonesian exports rose for the third consecutive month, indicating that economic activity (across the globe) is recovering from the initial (and most severe) stages of the COVID-19 crisis (when governments’ restrictions were toughest). Imports into Indonesia, however, slightly fell in July 2020 (compared to the preceding month).
When we take a look at a month-on-month comparison, Indonesia’s July 2020 trade surplus was primarily caused by the combination of recovering exports and stagnant imports. However, on an annual basis, Indonesia’s export and import performance remains far below levels seen last year. This shows that economic activity, both at home and abroad, has declined over the past year, particularly because the world has been feeling the impact of the COVID-19 crisis since Q2-2020.
Meanwhile, the good news is that according to the latest data of Indonesia’s central bank (Bank Indonesia), Indonesia’s current account deficit narrowed to USD $2.9 billion in the second quarter of 2020 (equivalent to 1.2 percent of gross domestic product, or GDP) thanks to the improving trade balance (which is particularly caused by the decline in imports) and falling foreign ownership of government bonds.
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