Last month we warned that Indonesia’s trade performance could easily continue to contract in February 2023, thereby continuing the trend we have seen since August 2022. Moreover, February is a short month, and therefore it typically has trouble to compete with other months in terms of trade activity.
While this outlook was correct, we were still quite surprised seeing the huge decline (USD $2.5 billion) in Indonesia’s import performance in February 2023 (compared to the preceding month). And therefore, it is important to take a closer look at what happened in Indonesia, trade-wise, in February 2023. First however, let’s take a look at global trade to put Indonesia’s trade performance into context.
On 23 March 2023, the United Nations Conference on Trade and Development (or UNCTAD), an intergovernmental organization within the United Nations Secretariat that promotes the interests of developing countries in world trade, released a brand new report (the March 2023 Global Trade Update). In the report it states that global trade reached a record USD $32 trillion in full-2022, with trade in goods around USD $25 trillion (which is an increase of about 10 percent year-on-year), while trade in services totaled around USD $7 trillion (an increase of about 15 percent from 2021).
These are record levels that were largely allowed by robust growth in the first half of 2022. Conversely, trade growth has been subpar during the second half of 2022, especially in the last quarter of 2022 (Q4-2022). In Q4-2022 trade in goods declined by about USD $250 billion relative to Q3-2022. Meanwhile, trade in services stayed virtually constant. Regarding Q1-2023 the UNCTAD expects global trade in goods to rise by about 1 percent compared to Q4-2022, while trade in services is expected to increase by about 3 percent on the same basis.It is interesting to take a look at the chart below. It shows that the rupiah started to appreciate against the US dollar when the global banking crisis kicked in.
This is the introduction of the article. The full article is available in our March 2023 report. This report (an electronic report) can be ordered by sending an email to email@example.com or a message to +62.882.9875.1125 (including WhatsApp).
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