Indonesia surprises with trade surplus on weaker imports

JAKARTA - Indonesia’s trade balance remained in surplus over April but narrowed significantly. Both imports and exports continue to post significant year-over contractions, a dynamic ANZ Bank says it does not see changing any time soon -  given that the boost to China’s economic activity in March, which Indonesia’s commodity exports are so leveraged to, appears to have been fleeting.

Indonesia’s exports fell by 12.65% over the year to April, compared to a 13.51% fall over the year to March. “Although it is an improvement, this feels short of the improvement  to -10.85% the consensus was looking for,” an ANZ research report says.
“Imports were somewhat more of an outlier relative to the consensus, falling by -14.62% over the year to April, compared to a -10.41% over the year to March and a consensus expectation for a more significant improvement to a -9.15% fall over the year to April.
“The bottom line of an expected exports contraction and a more significant fall in imports is a much better than expected trade surplus of US$670m over Apri, higher than March's US$497mn surplus and significantly higher, as well as directionally different, than the consensus expectation for the surplus to narrow to US$100m.”
Detailed breakdown of the import and export figures highlights vagaries in the oil and gas sector as responsible for both the import and export surprise.
Looking forward, says ANZ, the timing and implementation of public works and infrastructure programmes is more likely to emerge as a significant determinant of import growth.
“Recent encouraging signs of greater co-ordination between key government policy agencies and departments suggest that the value-added component of the imports basket is likely to increase as key public-works and infrastructure programs are accelerated.”  www.live.anz.com (ATI).