Indonesia trade surplus likely to rise in December on positive exports growth

Indonesian trade balance data for December is expected to be released on Monday, January 16 at 04:00 GMT. We foresee that the trade surplus will increase to USD8 billion, higher than the precious reading of USD7.7 billion, supported by the stronger growth in the country’s exports of around 7 percent y/y. The acceleration in export growth in the last-quarter of 2016 was definitely encouraging for the outlook on external balances this year.

Some moderation in the trade surplus may happen this year. Last year’s trade surplus was pretty much a function of poor import growth. As import growth seems to have bottomed out in the last-quarter of 2016, trade balance will come under pressure without help from export growth, reported DBS Group Research.

Also, it is expected that the recovery in energy prices will support the outlook for export growth in the near future. Also, the low base effects from last year shall help.

It is worth noting that the market will primarily focus on the numbers of exports of manufactured goods as its growth has underperformed the region in recent years and it remains to be seen if a catch-up is in the offing this year.

Meanwhile, USD/IDR traded 0.36 percent higher at 13,306 by around 07:00 GMT. Also, 10-year bond yields fell 7 basis points to 7.52 percent.