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June 2020 Inflation Update: Slightly Increase
July 03, 2020 09:17 WIB

June 2020 Inflation Update: Slightly Increase
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May Update: Decline in Import as a Signal of Economic Slowdown
June 16, 2020 15:32 WIB

In contrast to the USD 0.37 bn deficit in April 2020, Indonesia recorded a large trade surplus of USD 2.09 bn in May 2020. May’s surplus was also higher than our estimate of a USD 0.49 bn surplus and the median consensus of a USD 0.62 bn surplus. However, the surplus in May is not very encouraging as both exports and imports declined. Exports in May 2020 fell to USD 10.53 bn (-13.40% mom, -28.95% yoy), or similar to our estimate. At the same time, imports surprisingly declined to USD 8.44 bn (-32.65% mom,- 42.20% yoy). The surplus in May 2020 is worthy of attention as it signals a weakening economy marked by a decline in exports and imports, especially a decline in imports of raw materials and capital goods. During January - May 2020, the trade balance recorded a surplus of USD 4.32 bn. 
? Indonesia's exports fell in May 2020 on the back of lower oil and gas exports of USD 652.1 mn (15.64% mom, -42.64% yoy) and lower non oil and gas exports of USD 9,881.7 mn (-14.81% mom, -27.81% yoy). In volume terms, Indonesia’s exports in May 2020 were down by -6.07% mom compared to the previous month due to lower volumes of non-oil and gas exports (-7.16% mom). By contrast, volumes of oil and gas exports increased by 18.43%. The aggregate average prices of exported goods decreased in May 2020 (-7.80% mom, -3.23% yoy). By product type, the shipments of Indonesia's top non oil and gas exports fell including exports of animal/ vegetable fats and oil (HS 15), mineral fuel (HS 27), precious metals and jewelry (HS 71), rubber (HS 40), and footwear (HS 64). By contrast, there was a significant increase in shipments of iron and steel (HS 72). By destination country, the value of Indonesia’s non oil and gas exports to China edged up by 0.37% mom, while exports to the U.S. and Japan fell further (-15.93% mom and -20.67% mom). Exports in May 2020 were the lowest since July 2019, driven by economic weakness in destination countries and restrictions on social activities due to the Covid-19 outbreak. 
? Imports fell sharply in May 2020, driven by lower oil and gas imports (-23.04% mom, -69.87% yoy) and lower non-oil and gas imports (-33.46% mom,-37.34% mom). Total import volumes decreaed (-32.99% mom), while average prices increased (+0.50% mom). By product type, lower non oil and gas imports were seen in the categories of machinery and mechanical equipment (HS 84), electrical machinery and equipment (HS 85), iron and steel (HS 72), plastic and plastic goods (HS 39), and organic chemicals (HS 29). By country of origin, imports of non oil and gas products from China, Japan and Thailand all declined (-37.68% mom, -55.46% mom and -47.24% mom). The decline in imports was the result of falling domestic demand and interruptions in the production process due to large-scale social restrictions due to the Covid-19 outbreak 
? In May 2020, the imports of consumption goods, raw materials and capital goods all declined (-23.08% mom, -34.66% mom and -29.01% mom, respectively). The declining imports of capital goods and raw materials sends a signal of potential economic slowdown in the near future with domestic manufacturing activities set to weaken. 
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May 2020 Inflation Update: Different Inflation Pattern in May 2020
June 05, 2020 15:29 WIB

May’s headline inflation rate reached 0.07% mom, up but at a slower pace than in the previous month (+0.08% mom in April), and lower than the median market consensus (+0.12% mom) and our estimate of 0.10% mom. The inflation in Ramadhan and Idul Fitri in May 2020 exhibited a different pattern from the previous year, owing to the Covid-19 outbreak. People's consumption patterns changed during this year’s Ramadan and Idul Fitri due to the government’s large-scale social distancing restriction policy to limit the Covid-19 outbreak in Indonesia. This social restriction policy reduced the people’s income resulting in lower demand for goods and services. Inflation in May 2020 was driven by rising prices in the transportation component. However, the inflation in May 2020 is lower than it was in May 2018 (0.21% mom) and May 2019 (0.68% mom).

On an annual basis, the consumer price index in May 2020 (+2.19% yoy) showed a lower increase than in the same period in 2019 (+3.32% yoy). In more detail, prices in the core and administered goods components increased by 0.06% mom and 0.67% mom, respectively. Prices in the volatile goods component, however, decreased (-0.50% mom).

Inflation in May 2020 was driven by the transportation component (+0.87%) with a share of 0.10%. The increase in the transportation component reflected price increases in airfares and train fares amid large-scale social restrictions to reduce the impact of the Covid-19 outbreak. Inflation in the transportation component is still lower than during Ramadhan and Idul Fitri in the previous year. May’s inflation rate was restrained by deflation in the food, beverages and tobacco component (-0.32%) with a share of -0.08%. Deflation in this component reflected lower prices of red chilies, eggs, garlic, sugar, cooking oil, rice and onions. By contrast, the prices of red onions, chicken, meat and several types of cigarettes increased. The downward trend in the prices of some foodstuffs is in line with the government’s efforts to overcome the scarcity of staples available in the market during Ramadhan and Idul Fitri amid the Covid-19 outbreak.

Some other CPI components rose at a slower pace including the healthcare component (+0.27%), the personal care and other services component (+12%), the household component (+0.10%), the clothing component (+0.09%), the information component (+0.08%), the food and beverages component (+0.08%), the recreation component (+0.06%), and the housing component (+0.04%). There was no change in the education component (+0.00%). Inflation in the healthcare component was driven by price increases in the medicines and health products group.

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Forecast For Aug 2016

Exports US$ 10.40 bn
Imports US$ 10.20 bn
Trade Balance US$ 0.25 bn

Forecast for 2016

Exports US$ 148.50 bn
Imports US$ 147.20 bn
Trade Balance US$ 1.30 bn

DRI Forecast for Jan 2017

MoM(%) 0.74
YoY(%) 3.26

End of period(% p.a) 4.75

Forecast for 2016

Inflation(%) 3.30
SBI(% p.a) 4.75