Indonesia's trade balance in July 2024 is expected to maintain a surplus, potentially increasing from the previous month. Josua Pardede, Chief Economist at Bank Permata, forecasts a surplus of USD 2.67 billion for July, up from June's surplus of USD 2.39 billion. This improvement is driven by a faster growth rate in exports compared to imports. Pardede projects a 6.29% month-on-month (mtm) and 6.2% year-on-year (yoy) increase in exports, supported by rising prices of key Indonesian export commodities, such as crude palm oil (CPO), which grew by 2.6% mtm, and coal, which increased by 1.8% mtm. Despite a slowdown in export volumes, indicated by a decline in the manufacturing Purchasing Managers' Index (PMI) from Indonesia's major trading partners like China, the United States, India, and South Korea, the export performance remains robust. On the other hand, import performance is expected to grow by 5.62% mtm but will be slightly down by 0.42% y-o-y. Pardede noted that the 3.3% mtm increase in Brent crude oil prices could lead to higher oil and gas imports, although Indonesia's manufacturing sector showed a decline in July. The surplus increase is also reflected in a USD 5 billion rise in foreign exchange reserves at the end of July.
Conversely, Hosianna Evalia Situmorang, an economist at Bank Danamon, predicts a lower trade surplus of USD 1.3 billion for July 2024, down from the previous month's USD 2.39 billion surplus. She attributes this decline to a slowdown in both export and import activities, aligning with the contraction in Indonesia's Manufacturing PMI, which fell to 49.3 in July 2024, indicating the first contraction since August 2021. Despite the slowdown, Situmorang believes that the trade balance will remain in surplus. Overall, while there are differing views on the surplus amount, the trade balance is expected to continue its positive trend in July 2024.
