Indonesia posted a higher-than-expected USD $454.4 million trade surplus in April 2015. Previously, analysts predicted to see an April trade surplus of around USD $120 million. However, the USD $454.4 million trade surplus was smaller than the (revised) USD $1 billion trade surplus recorded in March. Moreover, the April surplus (the country’s fifth consecutive trade surplus) is primarily caused by a large drop in imports, signalling that Indonesia’s economic performance remains sluggish at the start of Q2-2015.
Indonesia’s exports contracted by 8.5 percent (y/y) to USD $13.1 billion, while the country’s imports fell 22.3 billion (y/y) to USD $12.6 billion in April (imports have now slid for seven consecutive months). Although it is positive that there was a 43.6 percent drop in refined oil imports (due to the government’s subsidized fuel price reforms earlier this year), imports of raw materials, capital goods and consumption goods were down as well.
Less imports of capital goods and raw materials indicate that investment realization in Indonesia has slowed. For example, the start of many highly anticipated government-led infrastructure projects, which require significant amounts of imports (and are expected to cause a multiplier effect in the economy), are still being awaited. During the first four months of 2015, the central government only spent about 2 percent of its planned 2015 infrastructure spending.
In combination with weakening exports, we can conclude that these figures indicate that the global and domestic economies remain bleak. Weak export performance is one of the main reasons why Indonesia has major difficulties to reverse the economic slowdown that has been ongoing since 2011. Sluggish economic growth (especially in China) causes weak global demand for commodities and thus trigger low commodity prices. Being an important commodity exporter, Indonesia’s economy is highly susceptible to such price fluctuations. Exports account for approximately 20 percent of Indonesia’s gross domestic product (GDP).
Still, after five consecutive monthly trade surpluses, the trade surplus has accumulated to USD $2.8 billion in the first four months of 2015, much better compared to the USD $1.89 billion deficit in full-year 2014 and the USD $4.08 billion deficit in full-year 2013.