Indonesia trade deficit likely to have narrowed in February

Indonesian trade balance data for the month of February is set to release tomorrow. According to a DBS Bank research report, the overall trade balance is likely to have improved to a deficit of USD 334 million with exports likely to have stayed in negative territory at -4.5 percent year-on-year from -4.7 percent seen in January 2019.

The softness in export was because of deceleration in prices as volumes accelerated from 13.6 percent year-on-year in January from 7.5 percent before. Meanwhile, imports have continued to fall because of lower oil prices. Imports are likely to have shrunk at 2.5 percent year-on-year from January’s fall of 1.8 percent.

|“We expect the weakness in exports to continue as global trade demand is still on the slide and prices of commodities remain weak, especially CPO and coal, two key Indonesia’s exports. Coal and CPO has been a drag on non-O&G balance which shows a balance of -USD705mn. O&G balance was also weak, showing a balance of USD455mn in Jan19 from an average of USD1bn in full year 2018”, added DBS Bank.