Nothing to cheer about Indonesia's September trade surplus

The trade account recorded a surplus of USD 1bn in September. But there wasn't anything to cheer about as both export and import numbers were simply poor. Imports were down by 26% (YoY) in the month, reflecting a weak domestic demand. Plainly, the trade surplus was not a result of strong export growth. 

Indeed, Indonesia's export growth performance has been relatively weak since 2011. Bulk of this weakness is due to the correction in global commodity prices. And even in volume terms, the picture looks rather bleak. The fall in volume of exports is consistent across all kinds of exports, except for crude palm oil (CPO) and some manufactured goods. In Jan-May15, volume of CPO exports is up by some 20% (YoY) while that in the "manufactured goods" component (including textiles, iron and steel as well as minerals and metals) is up by some 12%. 

Other exports from the manufacturing sector have not fared as well. Electronics, machineries and clothing see their export volumes practically flat if not slightly negative this year. Note that in value terms, total exports from the manufacturing sector are growing by an annual pace of just 3%. 

The economy is not getting much of a boost from export growth. A weak rupiah, at least considering how much it has fallen against the US dollar since 2013, has not helped much to improve competitiveness. At this juncture, only stronger investment growth can lift overall GDP growth. Going by the continuously poor import numbers though, investment growth is not heading up anytime soon.