Indonesia Macro Update - Trade Balance 19 Feb 2024
KBVS MACRO UPDATE
Monday, 19 February 2024
Global Trade Volume Weakens, Indonesia's Jan '24 Trade Surplus Declines
The decline in the growth of global trade volume in 4Q23 to 0.58% QoQ (prev: 0.65% QoQ) also contributed to Indonesia's Trade Surplus in Jan '24 decreasing to USD2.02 bn (Cons: USD2.82 bn, KBVS: USD2.24 bn, Prev: USD3.30 bn), although this continues the trade surplus streak for 45 consecutive months. On the export side, the decline in export value occurred in the Oil and Gas sector (-5.49% MoM) and Non-Oil and Gas sector (-8.54% MoM). Meanwhile, on the import side, it is essential to note that during Jan '24, there was a -3.13% MoM decrease, driven by a -19.99% MoM decrease in the value of Oil and Gas imports.
In our view, the decrease in the trade surplus value in Jan '24, lower than the previous month and the same month last year, is something to be noted. Especially with the approach of the fasting month, which will begin in the next month, it will be followed by an increase in the import of consumer goods. At the same time, this may raise concerns about the continued current account deficit in 1Q24 and the increasing concerns about the weakening fundamentals of the Rupiah. On the other hand, the hope for the expansion of the Manufacturing PMI of Indonesia's main trading partners, especially India (56.5 in Jan '24), is also expected to contribute to an increase in exports to those countries and drive a better trade surplus in Feb '24 after reaching a surplus of USD1.38 bn in Jan '24. However, we are concerned that global geopolitical conflicts will continue to pose challenges in further driving industry and global trade volume.
Regards,
Fikri C Permana - KBVS Research Team