Update COVID-19 in Indonesia: 365,240 confirmed infections, 12,617 deaths (19 October 2020)
19 October 2020 (closed)
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In the last month of 2013, Indonesia's trade balance posted a surplus of USD $1.52 billion, almost twice as high as economists had previously predicted. The December surplus implied Indonesia's third consecutive monthly trade surplus and fifth monthly trade surplus in full year 2013. However, considering the whole year, the trade balance still posted a deficit of USD $4.06 billion in 2013 as the total value of exports amounted to USD $182.57 billion while imports reached USD $186.63 billion.
Indonesia's Trade Balance 2013 (in billion US Dollar):
|Month||Oil & Gas||Non Oil & Gas||Total|| Oil & Gas
||Non Oil & Gas||Total|
Source: Statistics Indonesia
Thus, 2013 was the third successive year in which Indonesia recorded a trade deficit as the country's exports have declined amid reduced global demand (impacting particularly on commodity prices) while imports have been strong due to robust domestic demand among a rapidly expanding middle class.
In December 2013, the value of Indonesia's exports was USD $16.98 billion while imports were recorded at USD $15.46 billion, thus resulting in a USD $1.52 billion trade surplus. The surplus was supported by a USD $2.34 billion surplus in the non-oil & gas sector, while Indonesia's oil & gas sector posted a (structural) deficit of USD $0.82 billion as domestic oil output has been in decline for over a decade, while Indonesians' demand for fuels increase continuously.
Although it is a positive development that Indonesia has recorded a trade surplus in the last three months of 2013, it remains questionable whether this constitutes a structural improvement. Efforts by the Indonesian government to curb imports and support exports by fiscal reforms (for example through tax policies) did have a positive impact on the trade balance. However, the relatively wide trade surplus in December 2013 was mainly caused by a surge in mineral ore exports ahead of the government ban on unprocessed minerals implemented on 12 January 2014. Anticipating the ban, Indonesian miners exported as much raw material as possible. Therefore, it is expected that in the months ahead Indonesia will not post such a wide monthly trade surplus. The export ban on unprocessed minerals is in fact expected to burden the trade balance although exports of iron ore, led, copper and zinc concentrates will be able to continue after a last-minute revision to the ban. This revision was aimed at relieving some pressure on Indonesia’s current account difficulties.
Meanwhile, Indonesia's central bank hopes that the USD $1.52 billion trade surplus in December is able to support the rupiah exchange rate, which had fallen over 21 percent against the US dollar in 2013, as well as the current account balance. The current account deficit reached a record high at USD $9.9 billion in the second quarter of 2013 (equivalent to 4.4 percent of GDP) although showing an easing trend ever since. It is expected that the current account deficit has declined to between 3.2 and 3.5 percent of GDP by the end of 2013.
The weak rupiah is one of the factors that helped to improve Indonesia's trade balance at the end of the year as it made exports cheap and imports expensive although in terms of quantity exports also showed a rising trend. As the US dollar is expected to continue its appreciating trend against emerging market currencies, Indonesia's trade balance is forecast to improve in 2014. Moreover, prices of several commodities, particularly crude palm oil (CPO), are expected to rise.