Indonesia Macro Update - Trade Balance 15 Oct 2024
KBVS MACRO UPDATE
Tuesday 15 October 2024
Trade Surplus Improves: Maintaining Short-Term Rupiah Stability
The larger decline in imports (-8.91% MoM) compared to exports (-6.17% MoM) in Sep ‘24 helped improve Indonesia's trade surplus to USD3.26 bn (Cons: USD2.80 bn, KBVS: USD2.49 bn, Prev: USD2.89 bn), the highest level since Mar ‘24. From the export side, the largest monthly decline in Sep ‘24 came from the category of Animal/Vegetable Fats and Oils (HS15), which fell by -14.50% MoM to USD1.98 bn (Prev: USD2.39 bn). On the import side, the decline in Sep ‘24 was broad-based, affecting all categories of goods. However, the cumulative trade surplus for 3Q24, amounting to USD6.60 bn, may not be sufficient to reverse the current account deficit that has persisted since 2Q23.
In the short term, we view the increase in the trade surplus as a positive factor for the Rupiah. However, given concerns that the current account deficit will likely persist in 3Q24, alongside the continued contraction in manufacturing PMIs of major economies, we foresee risks of fundamental Rupiah weakening in the long term. Therefore, we estimate that the Rupiah will likely remain in the range of IDR 15,400 to IDR 15,700 per USD until the end of 2024. At the same time, we do not expect Bank Indonesia to lower its policy rate hastily before further reductions in the Fed rate occur.
Regards,
KBVS Research Team