Indonesia Macro Update - Trade Balance 15 Nov 2024
KBVS MACRO UPDATE
Friday, 15 November 2024
Potential Rupiah Depreciation as the Trade Surplus Narrows
The rise in commodity prices has spurred increases in both exports and imports across nearly all goods categories in Oct ‘24. However, contrary to the previous month, import growth of 16.54% MoM (Prev: -8.91% MoM) outpaced export growth of 10.69% MoM (Prev: -6.17% MoM) in the period. Consequently, the trade surplus narrowed to USD 2.47 bn (Cons: USD3.08 bn, KBVS: USD3.19 bn, Prev: USD3.26 bn).
Indonesia's exports in Oct ‘24 amounted to USD22.05 bn, growing by 10.25% YoY (Cons: 3.47% YoY, KBVS: 3.10% YoY, Prev: 6.44% YoY). Meanwhile, Indonesia's imports in Oct ‘24 reached USD21.94 bn, growing by 17.49% YoY (Cons: 7.18% YoY, KBVS: 5.20% YoY, Prev: 8.55% YoY).
Despite these changes, the narrowing trade surplus may exert further pressure for Rupiah depreciation in the short term. However, the widening interest rate differential between the Fed and Bank Indonesia over the last two months is expected to encourage capital inflows and support Rupiah stability in the longer term. Looking ahead, although depreciation risks persist, Indonesia's recent entry into the OECD and BRICS groups is anticipated to enhance the country's export comparative advantage. Additionally, year-end seasonality may lead to increased imports, particularly of consumer goods, during Nov and Dec ‘24.
Regards,
KBVS Research Team