Since late 2011, Indonesia has a structural current account deficit. This deficit makes the country highly vulnerable to capital outflows in times of global shocks as it signals that the country is dependent on foreign inflows. The deficit also puts depreciating pressures on the rupiah exchange rate.

Meanwhile, Indonesia’s balance of payments recorded a surplus of USD $15.2 billion in 2014 (from a USD $7.3 billion deficit in the previous year). This improvement is caused by the country’s declining current account deficit as well as a surplus in Indonesia’s capital and financial account. This surplus rose to USD $43.59 billion, almost double from USD $22 billion in 2013.

Discuss