Indonesia's International Investment Position (IIP) in the fourth quarter of 2023 saw an increase in net liabilities, as reported by Bank Indonesia. At the end of Q4 2023, Indonesia's IIP recorded a net liability of USD 260.3 billion, up from USD 251.9 billion in the previous quarter of Q3 2023. This rise in net liabilities stemmed from the growth in the Foreign Financial Liabilities (FFL) position, which exceeded the increase in Foreign Financial Assets (FFA). The FFL position in Indonesia increased alongside reduced uncertainty in the global financial markets and enhanced investor confidence in the domestic economic outlook. By the end of Q4 2023, Indonesia's FFL position rose by 3.8% (qoq) to reach USD 744.9 billion from USD 717.3 billion at the end of Q3 2023. The increase in the FFL position was primarily driven by inflows of foreign capital through direct and portfolio investments, influenced by the depreciation of the USD exchange rate. Meanwhile, Indonesia's FFA position also saw growth, mainly driven by an increase in foreign exchange reserves. By the end of Q4 2023, the FFA position reached USD 484.6 billion, up by 4.1% (qoq) from the previous period. Almost all components of FFA showed position increases.
Overall, Indonesia's IIP recorded an increase in net liabilities throughout 2023 compared to the end of 2022. The net liability of Indonesia's IIP increased from USD 250.1 billion (19.0% of GDP) at the end of 2022 to USD 260.3 billion (19.0% of GDP) at the end of 2023. This increase was driven by the growth in the FFL position by USD 42.8 billion (6.1% yoy), which exceeded the increase in the FFA position by USD 32.7 billion (7.2% yoy). Bank Indonesia assessed that Indonesia's IIP developments in Q4 2023 and throughout 2023 remained stable and supportive of external resilience. This is reflected in Indonesia's IIP-to-GDP ratio for 2023, which remained within the range of 19.0%, indicating relative stability compared to the previous year, 2022. Moreover, Indonesia's IIP liability structure was predominantly composed of long-term instruments at 93.5%, primarily in the form of direct investments. Looking ahead, Bank Indonesia is confident that Indonesia's IIP performance will remain safeguarded in line with efforts to recover the national economy. This will be supported by close policy synergies among Bank Indonesia, the Government, and relevant authorities aimed at strengthening the external sector's resilience. "Additionally, Bank Indonesia will continue to monitor potential risks related to Indonesia's IIP net liabilities to the economy," stated Erwin Haryono, Executive Director of Communication at Bank Indonesia, as quoted from the official statement.
