The central bank of Indonesia (Bank Indonesia) expects to see a trade surplus in May 2014. Governor of Bank Indonesia Agus Martowardojo stated that he is optimistic that Indonesia’s trade balance will show positive growth after recording a shocking deficit of USD $1.96 billion in April 2014. This deficit was mainly the result of weak global demand for crude palm oil and coal, both of which are Indonesia’s most important foreign exchange earners in the non-oil & gas sector. However, this global demand is expected to have remained weak in May.
Indonesia Balance of Trade (in million USD):
Regarding inflation, both Indonesian Trade Minister Muhammad Lutfi and Coordinating Minister for Economic Affairs Chairul Tanjung said that there is no cause for concern as prices have remained stable. Both ministers were particularly referring to the price of rice (in fact the extreme rainy conditions at the start of the year have a positive impact on rice harvests in June and July). At the end of June, the holy fasting month of Ramadan will commence (followed by Idul Fitri celebrations) and which traditionally trigger inflationary pressures as people increase spending on food products as well as on clothing, bags, shoes and transportation.
On a year-on-year basis, inflation rose from 7.25 percent in April to 7.32 percent in May 2014. The inflation figure of Southeast Asia’s largest economy is still high due to the impact of the reduction in fuel subsidies implemented in June 2013.
Inflation in Indonesia:
|Month|| Monthly Growth
| Monthly Growth
(annual percent change)
Source: Statistics Indonesia