According to the latest data from Statistics Indonesia (BPS), the country's trade balance showed a USD $1.74 billion surplus in June 2018. It was a much bigger surplus than had been estimated by analysts, primarily caused by weaker import growth than had been predicted by analysts.
Imports into Indonesia grew 12.66 percent year-on-year (y/y) to USD $11.26 billion in June 2018. According to BPS Head Suhariyanto, June's trade figures were affected by fewer working days due to the long Eid al-Fitr holiday. On a month-on-month basis, Indonesian imports fell 36.27 percent as domestic demand waned in the post-Ramadan and Eid al-Fitr period.
Non-oil & gas imports into Indonesia rose 8.95 percent (y/y) to USD $9.14 billion in June 2018, while oil & gas imports rose 32.09 percent (y/y) to USD $2.12 billion (mainly the consequence of higher crude oil prices).
Most of the imports originated from China (27.43 percent of the total), followed by Japan (11.51 percent) and Thailand (7.10 percent).
When broken down in types of imports, it is interesting to note that imports of consumer goods fell 1.0 percent (y/y) in June 2018, while imports of raw materials rose 14.6 percent (y/y) and imports of capital goods climbed 19.9 percent (y/y). Suhariyanto added that the Indonesian government needs to handle imports more carefully. Government-led infrastructure development projects are responsible for part of the nation's imports. Therefore, recently, the government said it would carefully study imports and would try to curtail imports in an effort to improve the trade balance.
Exports from Indonesia rose 11.47 percent (y/y) to USD $13.0 billion in June 2018, particularly supported by marked growth in exports of oil & gas products (amid stronger crude oil prices). Oil & gas exports rose 34.79 percent (y/y) to USD $1.72 billion in June 2018, while non-oil & gas exports climbed 8.61 percent (y/y) to USD $11.28 billion. In terms of non-oil & gas exports, China, Japan and the USA were the biggest overseas markets for Indonesian products in June 2018.
Although declining, Indonesia's overall trade balance in the first half of 2018 showed a USD $1.02 billion deficit, much weaker than the USD $7.67 billion surplus the country recorded in the January-June 2017 period. The deficit in H1-2018 puts pressure on Indonesia's current account balance as well as on the Indonesian rupiah exchange rate.