Indonesia Macro Update - Trade Balance 18 Feb 2025
KBVS MACRO UPDATE
Tuesday, 18 February 2025
Trade Balance Affected by Trump Tariffs
Indonesia’s trade surplus continued for the 57th consecutive month since Apr ‘20, expanding further in Jan ‘25 to USD3.45 bn (Cons: USD1.91 bn, KBVS: USD1.47 bn, Prev: USD2.24 bn). The drop in imports was mainly attributed to a sharp decline in Oil & Gas imports, which fell by -24.69% MoM (Prev: 8.10% MoM). On the export side, the contraction was more limited at -8.56% MoM, while on a yearly basis, exports still grew by 4.68% YoY (Cons: 6.99% YoY; Prev: 4.78% YoY).
The improvement in the Jan ‘25 trade surplus is expected to support Rupiah stability, especially with the implementation of the new mandatory Foreign Exchange Proceeds (DHE) regulation, which requires 100% of export proceeds exceeding IDR4.05 bn to be kept domestically for one year, effective Mar 1, ‘25. However, concerns over the implementation of Trump’s tariffs, possible retaliatory measures, and reciprocal trade actions remain key risks that need to be anticipated. These developments could lead to shifts in global supply chains, along with secondary and tertiary effects, including potential changes in production factors, industry relocations, and technology transfers. If strategically leveraged, these shifts could benefit Indonesia by boosting employment absorption and further driving economic growth.
Regards,
KBVS Research Team