Macro Economic

Indonesian Macro Update - Trade Balance 15 Sep 2023

Fikri C. Permana 15 September 2023

Friday, 15 September 2023

Aug ’23 Trade Surplus Improves but Further Current Account Deficit In 3Q23 Looms

Exceeding expectations, Indonesia's trade surplus in Aug '23 increased to USD3.12 bn (Cons: USD1.50 bn, KBVS: USD0.58 bn, Prev: USD1.31 bn), marking the 40th consecutive month of trade surplus. The export's side increase 5.47% mom, conversely imports declined by -3.53% mom.

On one hand, we anticipate that the development of the trade surplus will alleviate concerns on imported inflation in the current month. However, the IDR30.34 tn (USD1.99 bn) net foreign sales in Indonesia's portfolio assets in Aug '23 coupled with decreasing foreign exchange reserves in Aug ’23 to USD 137.1 bn (-USD0.44 bn from Jun ’23), brings concern that this will lead into another current account deficit in 3Q23. This is a fundamental challenge for the stability of the Rupiah and domestic portfolio assets. Therefore, this also prompts us to postpone our expectations for a reduction in the Bi7DRRR from initially expected in Sep '23 to Dec '23.

Fikri C Permana - KBVS Research Team