However, the reason why Indonesia could enjoy a widening trade surplus in July is not really positive as it was a huge drop in imports that allowed the growing surplus, with particularly imports of raw materials and capital goods sliding heavily (which could be a sign that manufacturing and investment experienced a setback after the Indonesian government imposed tighter restrictions – locally known as PPKM Level 3 or 4 – in the economic centers on Java and Bali at the start of July 2021).

And while Indonesia’s export performance also fell compared to the previous month (particularly due to falling demand from China, Indonesia’s biggest trading partner), this decline in exports was much milder compared to the drop in imports.



Hence, compared to the preceding month (June 2021), there was a significant drop in total trade of Indonesia (imports + exports). It is assumed that one of the reasons for this is that trade had ‘piled up’ in June 2021 as May 2021 was a ‘holiday month’ for Indonesia (Ramadan-Idul Fitri). Moreover, importers likely boosted orders in June 2021 shortly ahead of the expected tighter social and business restrictions in early July 2021. And so, June 2021 had actually been a bit of an anomaly.

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The full article is available in our August 2021 report. This report can be purchased by sending an email to info@indonesia-investments.com or a message to +62.882.9875.1125 (including WhatsApp).

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Bahas