June-2023 Trade Surplus Beats Estimate; Export-Import Fall
Key Takeaways:
▪️Indonesia enjoyed a USD3.45 bn trade surplus in Jun-2023 (vs USD436.5 mn in May-2023), beats the consensus est. of USD1.33 bn. This high surplus growth was mainly driven by a fall in imports by -19.4% MoM. Indonesia's exports also faced a slight decline of -5.1% MoM, driven by the downward trend of commodity prices. Therefore, Indonesia maintains a current trade balance surplus trend for 38 consecutive months, starting from May-2020.
▪️Exports slumped 21.18% YoY to USD20.61 bn in Jun-2023. A decrease in several leading commodity prices, such as coal (-13.1% MoM) and CPO (-12.5% MoM), lead to a slight decline in Indonesia's non-O&G export value to USD19.3 bn (-5.2% MoM). The downward trend of global commodity prices was caused by the weakening demand in China due to the nation's slow economic growth. Meanwhile, Imports were down -18.3% YoY to USD17.15 bn, indicating a lower demand in domestic consumption.
▪️Despite encountering a trade balance surplus, IDR currency has weakened 39bps to IDR14,997/USD on 17 Jul-2023. We expect high FX reserve position should maintain rupiah’s stability although the domestic currency has depreciated against USD recently. Moreover, the DHE mandatory that set to take effect on Aug 1, 2023, will lead to an increase of dollar supply.
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