Indonesia's Trade Balance Reports Another Trade Deficit in April
Indonesia's trade balance recorded another deficit in April 2013 as imports (USD $16.31 billion) exceeded exports (USD $14.70 billion). April's trade deficit, amounting to USD $1.62 billion, was mainly due to continued weak commodity exports in combination with strong oil, basic machinery and utensils imports. After five consecutive months of deficits up to February, Indonesia’s trade account reported a surplus of USD $330 million in March, but fell back into deficit in April. From January to April, Indonesia's trade deficit stands at USD $1.85 billion.
Indonesia's exports in April weakened 2.18 percent compared to March 2013 (month-to-month) and 9.11 percent compared to April 2012 (year-to-year). The country's oil and gas exports, in particular, declined fast. From March to April, an 18.37 percent decline in oil and gas exports was recorded.
Indonesia's abundance and variety of commodities is a vital asset to the country's economy (and government revenues) as commodities account for around 60 percent of exports. But being a major commodity producing and exporting country also implies being more susceptible to the effects of volatility in commodity prices on the global commodity market. Many important Indonesian export commodities, such as coal, palm oil and rubber have been hit by falling prices in recent years.
The import of oil remains strong as Indonesia's population is using more and more fuel for transportation purposes (as can be seen in last year's record high car sales figure), while domestic oil production has been in decline for a number of years. The government's plan to increase the price of subsidized fuel this June is expected to relieve some pressure on the trade deficit.
Analysts expect Indonesia to continue reporting a trade deficit throughout 2013 as international demand for commodities is still low and the country has a lack of basic industries, which results in the import of most machinery and utensils. The fasting month (Ramadhan) and Lebaran festivities are expected to give rise to more imports between June and August.