Indonesia Trade Balance: September 2019
September Trade Balance Improves
Gaining edge
Indonesia trade balance figure for September 2019 came in at a deficit of USD161mn, against market estimates of a surplus USD100mn. Nevertheless, looking back on a wider horizon, trade balance posture improved (see Graph 1 & Graph 2). Deficit value during the nine months ended September this year (9M19) stood at USD1.9bn vs. USD3.8bn in January to September 2018(9M18) or representing a fall of 49% YoY. Meanwhile during the 3Q19 (July to September 2019), value of trade deficit decreased to USD0.1bn vs US2.6bn in the same period last year.
Lesser Imports
Lesser imports during 9M19 was driven both by lower quantity and price of Indonesia imports components as compared to 9M18 (see Graph 3). For example, quantity of import of crude oil and refined oil fell by 37.2% and 11.1% respectively as compared to 9M18. We relate this decline to both improving public transportation within main cities in Indonesia as well as the contraction of domestic car sales during 9M19. Based on the Gaikindo (Association of Indonesia Automotive Industries), wholesales up to August this year pointed to 660,720 units vs. 763,322 units during the same period last year or representing a decrease by 13.4%. At the other end, the aggregate price of Indonesia imports fell by 7.7% YoY (September 2018: +15.9% YoY).
More conducive to trigger higher GDP growth ahead
Latest Indonesia trade balance posture, be maintained in the coming 4Q19 one, gives strong hope for higher GDP growth next years. Other components of the economy being stable, ever increasing value of imports give a detrimental effect to the overall macro economy performances ( see Graph 4).
The JCI
The JCI, during the release of widely-expected trade data, managed to stay strengthening in October 14 (closed up by 21 points to 6,127pt), despite the fact that September trade balance was against market estimates. We treat this to the fact that Indonesia equity market being almost efficient whereby the better trade posture was factored in.