In­done­sia ex­port, im­port slump deep­ens

The Pak Banker - - MARKETS/SPORTS -

In­done­sia posted a small trade sur­plus in Jan­uary, con­found­ing ex­pec­ta­tions for a third monthly deficit, due largely to a slump in im­ports from per­sis­tently weak do­mes­tic con­sump­tion. Slid­ing prices for oil, gas and other com­modi­ties have led to a sharp drop in ex­port earn­ings for South­east Asia's largest econ­omy, and de­te­ri­o­rat­ing global de­mand could push the cen­tral bank to cut rates again this week, some econ­o­mists said.

Ex­ports plunged 20.72 per­cent in Jan­uary to $10.50 bil­lion, the weak­est ship­ment by value since Septem­ber 2009 and the 16th straight month of de­cline. Econ­o­mists sur­veyed had ex­pected a 15.40 per­cent drop.

Im­ports fell 17.15 per­cent, sharper than econ­o­mists' es­ti­mates of 8.14 per­cent, data from the sta­tis­tics bureau showed. Im­ports of raw ma­te­rial and cap­i­tal goods were all down, the bureau said, but im­ports of con­sumer goods rose.

Weaker than fore­cast ex­ports and im­ports led to a $50.6 mil­lion sur­plus in Jan­uary. A Reuters poll of an­a­lysts had ex­pected a $360 mil­lion deficit for the month, fol­low­ing a re­vised $161 mil­lion deficit in De­cem­ber. "It's a dis­ap­point­ing im­port num­ber," said Gundy Cahyadi, DBS' econ­o­mist in Sin­ga­pore. "For GDP growth to re­turn to 5 per­cent this year, the econ­omy needs stronger do­mes­tic de­mand, par­tic­u­larly in­vest­ment. And the monthly im­port num­bers are a good proxy for the strength in do­mes­tic de­mand," he added. In­done­sia's trade bal­ance moved back into sur­plus in 2015, af­ter three years of deficits, largely due to a fall in im­ports as con­sump­tion and in­vest­ment stayed weak. The govern­ment is tar­get­ing 5.3 per­cent GDP growth this year af­ter the econ­omy grew at its slow­est since the 2009 fi­nan­cial cri­sis last year. Some econ­o­mists ex­pect big­ger govern­ment spend­ing on in­fra­struc­ture to lead to a re­cov­ery in im­ports this year while pres­sure on its ex­ports from slid­ing com­mod­ity and oil prices will con­tinue to ham­per a turn­around in the econ­omy.

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