Indonesia recorded the largest trade deficit on record in April. The trade balance saw a record deficit of USD 2.50 billion. The oil and gas deficit widened, while the non-oil and gas account recorded a deficit being in surplus. However, on a three-month rolling basis, the trade deficit averaged USD 0.50 billion, larger than the USD 0.20 billion recorded a year ago, but significantly smaller than the figures seen at the end of 2018.
Exports dropped from March’s USD 14.12 billion to USD 12.60 billion in April. On a year-on-year basis, export values dropped 13.10 percent, a shaper fall than the 9.40 percent seen in the prior month, partially worsened by fewer working days. Oil and gas exports were a major drag, with the fall driven by a continued fall in volumes rather than prices. This is in line with the wider story of a structural downtrend in the sector amidst ageing oil wells and limited new exploration activity, and highlights the urgent need for reform in the sector. On the contrary, the fall in non-oil and gas exports show falling prices, as volumes rose 12.65 percent, noted ANZ in a research report.
Meanwhile, imports surged to USD 15.19 billion. On a year-on-year terms, import values dropped 6.58 percent, as compared with March’s fall of 7 percent. While the drop in import prices decelerated, largely reflecting a rebound in oil and gas prices, import volumes dropped after positive growth in March.
“Historical trends suggest imports will remain elevated in the run-up to and during the Ramadan season (which ends on 4 June 2019), before falling back significantly after. Accordingly, imports will keep the overall trade balance under pressure in the near term before a reversal in June, in our view”, added ANZ.