Indonesia’s trade balance plunged to near US$2 billion deficit for April

JAKARTA – ANZ Bank is describing a sharp deterioration in Indonesia’s trade balance over April as “truly shocking”.  It says that while export growth remains weak due to softer prices for key commodity and manufactured exports, the only explanation for import strength is a combination of lagged currency impacts and some retooling and capacity build-out aligned with increased FDI inflows.

 “The external position is likely to remain negatively pressured in coming months if our assessment of these dynamics proves true,” ANZ says.
Indonesia’s trade balance plunged to a deficit of US$1,962 million from a surplus of US$669 million in March compared with market expectations of a marginal surplus of  US$178 million for the month. Over the month, exports declined by nearly US$1 billion to be down by 3.2% y/y. Import growth was weak on a y/y basis (-1.3%y/y) but this disguised a near US$2 billion sequential increase in imports over the month.  www.live.anz.com (ATI).