The central bank (Bank Indonesia) announced on Friday (15/05) that Indonesia’s current account deficit narrowed to USD $3.8 billion, or, 1.8 percent of gross domestic product (GDP) in the first quarter of 2015. Although this result is slightly higher than Bank Indonesia’s estimation (1.6 percent of GDP), it was lower than the current account deficits in Q4-2014 (2.6 percent of GDP) or Q1-2014 (1.9 percent). This positive performance was mainly caused by a narrowing deficit in the country’s oil & gas trade balance.

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Indonesia’s economic growth in the first quarter of 2015 was recorded at 4.71 percent (y/y). Although it had been expected that Indonesia’s GDP growth figure would slip below the five percent mark, the slowdown was worse than initially expected. Suryamin, Head of Statistics Indonesia (BPS), stated earlier today (05/05) that the country’s economic growth slowed to a five-year low on the back of weak exports (the result of reduced economic growth in export markets) and lower crude oil prices.

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Per May 2015 the government of Indonesia will offer tax breaks to companies that export a minimum of 30 percent of their production. Earlier this month, Indonesian President Joko Widodo signed a package that includes the tax break for exporters as well as a tax break for multinational companies that are willing to re-invest profits in Indonesia instead of sending profits and dividends to shareholders abroad. This package is designed to improve Indonesia’s trade balance (and the related current account balance).

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The central bank of Indonesia (Bank Indonesia) expects that the country’s current account deficit has eased to 1.6 percent of gross domestic product (GDP) in the first quarter of 2015. This estimate is lower than the institution’s initial forecast of 2 percent of GDP. Main reason for this more optimistic view is that Indonesia experienced a USD $2.43 billion trade surplus in the first quarter of 2015. Particularly the unexpectedly-wide USD $1.13 billion trade surplus in March will manage to ease pressures on the country’s current account.

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Over the past two days the Indonesian rupiah has performed strongly against the US dollar. The primary reason for this performance is Indonesia’s March trade surplus. On Wednesday (15/04), Statistics Indonesia announced that the country’s March trade surplus totaled USD $1.13 billion. This is Indonesia’s fourth straight monthly trade surplus and the highest one since December 2013. Moreover, the USD $1.13 billion March surplus was nearly twice the size that analysts had forecast previously.

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Statistics Indonesia (BPS) announced on Wednesday (15/04) that Indonesia posted a USD $1.13 billion trade surplus in March 2015, the country’s fourth straight monthly trade surplus, and almost twice the size that analysts had forecast earlier. Despite the monthly trade surplus being good news, data also showed that both Indonesian exports and imports contracted. Exports were down 9.8 percent (y/y) to USD $13.71 billion in March, while imports fell 13.4 percent (y/y) to USD $12.58 billion.

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In the World Bank’s East Asia and Pacific Economic Update, released on Monday (13/04), the Washington-based institution revised down its economic growth forecast for Indonesia to 5.2 percent (y/y) in 2015, down from 5.6 percent in its October 2014 Update. Main reasons for this downgrade is that Indonesia’s export performance remains weak amid the sluggish global economy, including weak demand from China (Indonesia’s largest trading partner). Meanwhile, Indonesia’s domestic consumption is curtailed by high interest rates.

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Amid unclarity over the newly introduced mandatory use of letters of credit (L/C), the Indonesian government has showed some flexibility. Starting from Wednesday (01/04) Indonesian exporters of four key commodities - coal, palm (kernel) oil, oil & gas, and minerals - are required to use L/C for all export deals. This new rule was developed in order to increase Indonesia’s export earnings and enhance monitoring sales of the country’s natural resources. However, a temporary exemption is now made possible.

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This week L’Oreal Indonesia opened its new factory in Cikarang (West Java), while Mitsubishi Motors Krama Yudha Indonesia started construction of a new car manufacturing plant, in Cikarang as well. Both factories will produce products for the Indonesian market and the regional ASEAN market as well as non-ASEAN markets. The Indonesian government will be pleased to see these investment commitments as it is eager to increase exports from Southeast Asia’s largest economy in order to curb the wide current account deficit.

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Statistics Indonesia (BPS) announced on Monday (16/03) that Indonesia posted a USD $738.3 million trade surplus in February 2015, the country’s third consecutive monthly trade surplus, and higher than the forecast of Indonesia’s central bank (Bank Indonesia) and a Reuters poll which both estimated a surplus in the range of USD $500 and $520 million. The surplus was also larger than the USD $709.4 million trade surplus posted in the first month of 2015. The February surplus was particularly the result of declining imports.

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While many are relieved to see a trade surplus for Indonesia in August 2019, the picture does not look too positive when we delve a bit deeper in the data, and shows that global conditions are far from positive amid contracting international trade and subdued global economic growth (with ongoing tariff tensions between the United States and China being a key issue).

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After nearly nine years of talks and negotiations (although communication between both sides had been put to a halt - amid diplomatic tensions – at more than one occasion over these nine years) Indonesia and Australia finally signed the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) in Jakarta on 4 March 2019. It is an agreement that launches a brand new chapter in economic relations and cooperation between Australia and Indonesia.

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Based on the latest data from Indonesia’s Statistical Agency (BPS), Indonesia recorded a USD $227.1 million trade surplus in September 2018. Although it is a very small surplus, it did lead to some optimism. After all, Indonesia had recorded big monthly trade deficits of USD $2.0 billion and USD $944.2 million in July 2018 and August 2018, respectively.

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Based on the latest data of Indonesia’s Statistics Agency (BPS), Indonesia’s trade deficit was recorded at USD $1.02 billion in August 2018. Although improving from the USD $2.03 billion trade deficit one month earlier (which constituted Indonesia’s biggest monthly trade deficit in five years), the deficit remains robust and therefore causes persistent concerns about the country’s current account deficit and the rupiah exchange rate.

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The trade balance of Indonesia showed another deficit in February 2018, the nation's third consecutive monthly trade deficit. Based on data from Indonesia's Statistics Agency (BPS), the country's total exports reached USD $14.1 billion in February, up 10.1 percent on a year-on-year (y/y) basis, while total imports grew 25.2 percent (y/y) to USD $14.2 billion.

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The central bank of Indonesia (Bank Indonesia) said it expects to see another monthly trade deficit - approximately USD $230 million - in February 2018. If so, it would be the third straight monthly trade deficit for Southeast Asia's largest economy after a USD $220 million deficit in December 2017 and a USD $678 million deficit in January 2018 (the latter being the country's highest monthly deficit since April 2014).

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In line with the increase in domestic economic activity, Indonesia's trade balance recorded a USD $678 million deficit in January 2018. The deficit was particularly attributed to a shrinking surplus of the country's non-oil & gas trade balance. Although Indonesia's oil & gas deficit declined in the first month of 2018, it was not enough to offset the impact of the shrinking non-oil & gas surplus. Hence the country posted its second consecutive monthly trade deficit.

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Through Trade Ministry Regulation No. 82/2017 on the Terms of Use of National Shipping and Insurance Companies for the Export and Import of Certain Goods the Indonesian government requires exporters of crude palm oil (CPO), coal and rice to use ships that are owned by local sea transport companies as well as to use domestic insurance. This regulation will come into effect, gradually, per May 2018.

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In the last month of 2017 Indonesia posted a USD $270 million trade deficit according to the latest data from Statistics Indonesia (BPS). This result goes against the prediction of most analysts, who expected to see another trade surplus for Southeast Asia's largest economy. Indonesia posted a trade surplus in all months of 2017 with the exception of July and December.

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Earlier this week, the central banks of Indonesia (Bank Indonesia), Malaysia (Bank Negara Malaysia), Thailand (Bank of Thailand) jointly announced the launch of the local currency settlement framework. This framework aims at boosting the use of local currencies in transactions (specifically related to trade and investment) conducted between Indonesia, Malaysia and Thailand in an effort to reduce these countries' dependence on the US dollar.

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