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Indonesia’s April trade surplus was slightly higher than expected at $3.56 billion, as imports were lower than expected, Statistics Indonesia data showed on Wednesday.
Southeast Asia’s largest economy has reported a merchandise trade surplus every month for the past four years, but the surplus has been narrowing recently due to weak exports. For more than a year, the resource-rich country’s exports have been hurt by falling commodity prices and weak global trade. Exports in April increased by 1.72% year-on-year to US$19.62 billion, lower than economists’ expectations of 4.57%. Although weaker than expected, Indonesia’s exports expanded in April for the first time in 11 months.
Affected by falling global coal prices, coal shipments fell 19.26% to $2.61 billion in April from the same period last year despite higher export volumes. Coal is Indonesia’s largest export product. Imports grew by 4.62% to US$16.06 billion, while economists predicted an annual growth rate of 8.69%.
April trade data reinforced expectations from Permata Bank economist Josua Pardede that Indonesia will continue to see a decline in its trade surplus and a widening of its current account deficit this year, but only to a limited extent. Pardede said: “As inflation expectations remain low, considering that the external balance is controllable and the Indonesian rupiah exchange rate remains stable, we believe that Bank Indonesia may maintain the BI interest rate at 6.25% at the Bank Indonesia meeting in May.”
Bank Indonesia will hold its monthly monetary policy review next week. The central bank unexpectedly raised interest rates in April to support the rupiah currency after it fell to a four-year low against the dollar. Governor Perry Warjiyo said last week that the central bank may not need to raise interest rates further as the currency stabilizes and capital inflows return.
