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.

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Analysis of Indonesia's Current Account Deficit

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