Indonesia’s June 2014 Trade Balance

The non-oil & gas trade surplus in June 2014 stood at USD $0.30 billion, thus declining from the USD $1.39 billion surplus in May 2014. The decline of the non-oil & gas surplus is caused by the 11.41 percentage point increase (mtm) in non-oil & gas imports which exceeded the increase in non-oil & gas exports at 1.43 percent (mtm). The growth in non-oil & gas imports occurred in 7 of 10 major categories of goods, namely machinery and mechanical appliances, iron and steel, plastics and plastic goods, organic chemicals, motor vehicles and spare parts, iron and steel products, and the food industry. Meanwhile, the increase in non-oil & gas exports was mainly supported by higher exports of machinery/electrical equipment, machinery/mechanical appliances, jewelry/gems, vehicles and automotive parts, and a variety of chemical products. Based on destination, the increase in non-oil & gas exports in June 2014 occurred primarily in exports to the USA, Japan, Thailand, Taiwan and the European Union.

The narrowing trade deficit in the oil & gas sector (narrowing to USD $0.60 billion from USD $1.34 billion in the May 2014) had a positive impact on the June trade balance. The narrowing of the oil & gas deficit was due to a 17.45 percent (mtm) increase in oil & gas exports (both crude oil, oil products and gas), while oil & gas imports contracted by 8.42 percent (mtm).

According to Indonesia’s central bank (Bank Indonesia), the June trade balance is in line with the seasonal pattern of Idul Fitri and is expected to improve amid an increase in export activity as the global economy recovers.

Indonesia Balance of Trade June 2014 (in USD million):

Trade Balance June 2014 Indonesia Investments

Indonesia’s July 2014 Inflation

During the month of Ramadan and ahead of Idul Fitri celebrations, which always trigger inflationary pressures, inflation was mainly due to higher prices in the foodstuffs and transport groups. Volatile food products inflation reached 2 percent (mtm) or 2.63 percent (yoy) mainly due to higher prices of fresh fish, rice, beef and onions. Inflation in the transportation subgroup rose 1.36 percent (mtm), mainly due to higher inter-city transport fares and air freight rates. Inflation also accelerated due to higher electricity tariffs. Meanwhile, core inflation is still under control and relatively stable at 4.64 percent (yoy), supported by declining global commodity prices and a strengthening of the rupiah.

Bank Indonesia still holds an inflation target of between 3.5 and 5.5 percent in 2014, and between 3.0 and 4.0 percent in 2015. However, the second half of 2014 will see some inflationary pressures (rising food prices) due to the El Nino weather cycle and effects of restricting the consumption of subsidized fuel.

 Inflation in Indonesia:

Month  Monthly Growth
 Monthly Growth
January          1.03%          1.07%
February          0.75%          0.26%
March          0.63%          0.08%
April         -0.10%         -0.02%
May         -0.03%          0.16%
June          1.03%          0.43%
July          3.29%          0.93%
August          1.12%  
September         -0.35%  
October          0.09%  
November          0.12%  
December          0.55%  
Total          8.38%          2.94%
     Inflation Rate
      July 2014
   Inflation Rate
  Calender 2014
  Inflation Rate
General            0.93            2.94           4.53
- Core            0.52            2.40           4.64
- Administered Price            1.32            3.72           6.18
- Volatile            2.00            4.26           2.63
    2008   2009   2010   2011   2012   2013
(annual percent change)
   9.8    4.8    5.1    5.4    4.3    8.4

Source: Statistics Indonesia