Agus Martowardojo, Governor of the central bank of Indonesia (Bank Indonesia) expects a trade surplus of around USD $700 million in February 2014. If Martowardojo's forecast is realized, it would be a sharp contrast to the USD $430.6 million trade deficit that was recorded one month earlier. In January, the trade deficit was mainly due to declining exports of coal and vegetable oil (which together account for 26.7 percent of total non-oil & gas exports), among others, due to ongoing annual contractual negotiations at the year-start.
Exports of ore, minerals and powdered metals (which together account for 2.43 percent of total non-oil & gas exports), such as copper and nickel, also declined sharply in January 2014 as a result of the implementation of the Minerba Act (which affects mineral as well as coal mining). Exports of manufactured goods, on the contrary, continued to expand in the first month of the year.
In December 2013, Indonesia had posted an unexpectedly large monthly trade surplus of USD $1.52 billion because miners increased exports of unprocessed minerals as they wanted to export as much of raw material as possible ahead of the export ban that came into effect on 12 January 2014. These exports helped to ease the problematic current account deficit to 1.98 percent of the country's gross domestic product (GDP) in the fourth quarter of 2013 after having hit a record high of 4.4 percent of GDP in the second quarter of 2013. However, according to January 2014 trade data, mineral ore exports fell over 70 percent (month-to-month) after implementation of the ban.
Optimism about a trade surplus in February are based on expectation that the aforementioned factors that accounted for the trade deficit in January will have eased.
Bank Indonesia, which revised down its forecast for Indonesia's economic growth in 2014 from the range of 5.8-6.2 percent to the range of 5.5-5.9 percent, said that household consumption continues to be the main pillar of economic expansion in Southeast Asia's largest economy. Consumption growth is likely to grow over 5 percent in 2014. Reasons that were cited for the downward revision of economic growth are the impact of further US Federal Reserve tapering, slowing economic growth in China (one of Indonesia's most important trading partners), and the still fragile state of exports among emerging markets.