The central bank of Indonesia (Bank Indonesia) announced that the nation's current account deficit (CAD) eased to 1.83 percent of gross domestic product (GDP) in the third quarter of 2016, improving from a revised 2.2 percent of GDP deficit in the preceding quarter. Bank Indonesia further informed that the CAD will most likely remain in the range of 2.0 - 2.5 percent of GDP in full-year 2016. In 2015 Indonesia's CAD eased to 2.1 percent of GDP. Since late-2011 Southeast Asia's largest economy has had to cope with a wide current account deficit.
Indonesia's current account deficit reached USD $4.5 billion in the third quarter of 2016, or 1.83 percent of the nation's GDP. This is an improvement compared to the preceding quarter but when we compare it to the third quarter of 2015 it is, however, slightly higher. In Q3-2015 Indonesia recorded a USD $3.95 billion (or 1.81 percent of GDP).
Meanwhile, Indonesia's balance of payments swelled to USD $5.7 billion from USD $2.2 billion in the second quarter of 2016. Hendy Sulistiowati, Executive Director of Statistics at Bank Indonesia, said the higher capital and financial transaction surplus (recorded at USD $9.4 billion in Q3-2016) caused an overall improvement in the balance. This higher capital and financial transaction surplus was caused by rising foreign direct investment (FDI) into Indonesia (recorded at USD $5.2 billion in Q3-2016).
The higher balance of payments managed to support Indonesia's foreign exchange reserves. These reserves grew from USD $109.8 billion at the end of Q2-2016 to USD $115.7 billion at the end of Q3-2016.