INDONESIA posted its biggest trade surplus in nine years in July, as exports improved while domestic demand for imports remained subdued amid the coronavirus pandemic, data from the statistics bureau showed on Tuesday. South-east Asia's largest economy reported a US$3.26 billion surplus in July, the bureau said, the biggest since August 2011, according to Refinitiv Eikon data. The figure handily beat a forecast in a Reuters poll for a US$680 million surplus and followed a US$1.27 billion surplus in June.
July exports grew 14.33 per cent from June to US$13.73 billion, though they were 9.9 per cent below the value of shipments in the same month last year. Still, the pace of contraction was slower than the poll's prediction for a 16.65 per cent drop. By value, exports were the highest since March. Statistics bureau chief Suhariyanto attributed this to sales of agricultural products like palm oil, herbs and birds nests, and despite weaker exports of coal, rubber and oil and gas.
Imports plunged 32.55 per cent on an annual basis to US$10.47 billion, steeper than the 22.48 per cent fall expected in the poll. The data indicates the potential for a further narrowing of the current account deficit for the rest of the year, even after it significantly narrowed in the first half due to the pandemic. Central bank data earlier on Tuesday showed Indonesia's current account gap in April-June was equal to 1.2 per cent of GDP, less than half the deficit in the same period in 2019.
Bank Danamon economist Wisnu Wardana said that, despite the trade data, the central bank may need to consider a number of other indicators before utilising "a limited room of monetary easing", such as inflation and the rupiah's movement.
Bank Indonesia is due to wrap up a two-day policy review on Wednesday. The majority of economists in a Reuters poll, including Mr Wardana, expects the benchmark rate to remain unchanged after four cuts to support the economy. REUTERS
