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Trade Outlook
November Update: Large Deficit
December 18, 2019 15:42

Indonesia recorded a large trade deficit of USD 1.33 bn in November, the second-highest deficit in 2019. This owed to both lower monthly exports and surging imports. Exports fell to USD 14.0 bn (-6.2% mom, -5.7% yoy), while imports climbed to USD 15.3 bn (+3.9% mom, -9.2% yoy). November’s large trade deficit is also far worse than the median consensus of a USD 105 mn deficit and our projection of a USD 46.2 mn deficit. In addition, it also reflects both a higher oil and gas deficit (USD 1.02 bn) and a higher non oil and gas deficit (USD 0.30 bn). In the January-November period, Indonesia’s trade deficit reached USD 3.10 bn, or below 2018’s deficit of USD 7.62 bn.

The lower monthly exports reflect a drop in non oil and gas exports (-7.9% mom), while the oil and gas exports rose further (+20.7% mom). The lower monthly exports reflect weaker trade volume (-8.7% mom, +9.7% yoy), since average prices actually rose (+2.8% mom, -14.0% yoy). The average prices of Indonesia’s oil and gas exports surged 9.8% mom. By product type, shipments of Indonesia’s top non oil and gas export products weakened such as exports of mineral fuel (HS 27), vehicles and parts (HS 87), and iron and steel (HS 72). By destination country, the value of Indonesia’s non oil and gas exports to China, Japan, and the U.S. dropped by 12.6%, 10.4%, and 3.7% mom, respectively. In the Jan-Nov 2019 period, Indonesia’s exports to these three countries contributed 36.8% of Indonesia’s non oil and gas exports.

The increase in monthly imports continued on the back of strong oil and gas imports (+21.6% mom) and higher non oil and gas imports (+1.6% mom). Import volumes increased (+19.2% mom, +3.9% yoy), while average prices contracted (-12.8% mom, -12.6% yoy). By product type, Indonesia’s main non oil and gas imports were mixed. Imports of mechanical machinery (HS 84) and electrical machinery (HS 85) increased, while imports of iron and steel (HS 72) dropped. By country of origin, the imports of non oil and gas products from China (which accounted for 29.7% of the non oil and gas imports) rose by 5.7%, while shipments from Japan and Thailand decreased by 14.4% and 10.7% mom, respectively.

Due to demand related to the year-end festivities and stable Rupiah, the imports of consumption goods rose the most (+16.1% mom), outpacing the imports growth of raw materials (+2.6% mom) and capital goods (+2.6% mom). In Jan-Nov 2019, raw materials accounted for 73.9 percent of the total non oil and gas imports, followed by capital goods (16.6%) and consumption goods (9.4%).