Indonesian Macro Update - Trade Balance 15 Mar 2024
KBVS MACRO UPDATE
Friday, 15 March 2024
The Decline in Trade Surplus Persists, Continued Concerns Over Current Account Deficit
The decline in exports by -5.79% MoM or -9.45% YoY (Cons: -6.42% YoY, KBVS: -2.07% YoY, Prev: -8.06% YoY), primarily driven by a decrease in Gas exports (-39.08% MoM) which also reflects the decline in Natural Gas prices (-34.69% MoM); followed by a decrease in Steel exports (-27.08% MoM); and a decline in exports of Animal/Vegetable Fats and Oils (-22.44% MoM), has led to the trade surplus shrinking to USD0.87 billion in Feb '24, marking its lowest level since May '23. Concurrently, there was also a decrease in imports by -0.29% MoM or +15.84% YoY (Cons: +10.14% YoY, KBVS: +11.49% YoY, Prev: +0.36% YoY). The largest decrease in imports came from the categories of Iron and Steel Products (-10.86% MoM); Machinery/Mechanical Equipment and Parts (-2.91% MoM); and Machinery/Electrical Equipment and Parts (-2.51% MoM).
Furthermore, this decline in the trade surplus is concerning as it is feared to contribute to expectations of continued current account deficits, along with the fundamental factors of further weakening of the Rupiah, especially amidst the strengthening of the DXY and the diminishing likelihood of a Fed Rate cut. Therefore, we are also concerned about the possibility of the Rupiah approaching the level of IDR15,700 again in the remainder of Mar ‘24. In addition to adding downside risk to the economic growth decline in 1Q24 to just 4.9% YoY.
Regards,
KBVS Research Team