Indonesia Macro Update - Trade Balance 16 Dec 2024
KBVS MACRO UPDATE
Monday, 16 December 2024
Trade Surplus Boosts Rupiah Stability
The sharper decline in monthly imports, down -10.71% MoM or 0.01% YoY (Cons: 7.08% YoY, KBVS: 4.89% YoY, Prev: 17.49% YoY), compared to exports, which fell -1.70% MoM or 9.14% YoY (Cons: 6.30% YoY, KBVS: 6.07% YoY, Prev: 10.25% YoY), has led to Indonesia’s trade surplus rising to USD4.42 bn (Cons: USD2.34 bn, KBVS: USD2.78 bn, Prev: USD2.47 bn). This marks the continuation of Indonesia’s trade surplus for the 55th consecutive month.
The decline in exports and imports can be seen as an anticipatory adjustment to global supply chain shifts expected in 1Q25, following the implementation of the Trump Tariffs after the presidential inauguration on Jan 20, ‘25. In terms of goods usage categories, imports have declined across all groups: Consumer Goods (-0.84% MoM), Raw Materials/Supporting Goods (-11.97% MoM), and Capital Goods (-10.77% MoM). On the export side, monthly exports also declined across all sectors.
The significant increase in the trade surplus, reaching its highest level since Mar ‘24, serves as a strong buffer to mitigate risks of a current account deficit in 4Q24. This surplus also eases the depreciation pressures on the Rupiah, which have persisted over the past two months. Furthermore, this development strengthens the case for Bank Indonesia (BI) to provide additional monetary stimulus. The surplus could bolster BI’s ability to reduce the benchmark interest rate (BI Rate) by 25 bps in its upcoming policy meeting on Wednesday, Dec 18, ‘24. This potential policy adjustment would support economic growth while maintaining Rupiah stability amid global uncertainties.
Regards,
KBVS Research Team