Deni Ghifari, Jakarta – Indonesian exports plummeted last month, yet the country maintained its trade surplus because imports dropped even further, as a feeble global economy takes its toll on the exchange of goods and services.
Statistics Indonesia (BPS) reported on Monday that the country's exports exceeded imports by US$3.94 billion in April, making for a 36-month trade surplus.
"The surplus in the trade value in April 2023 was wider than in the preceding month due to a deeper drop in imports than in exports," said BPS official Imam Machdi, adding that exports had plunged by 29.4 percent year-on-year (yoy) while imports were down 22.32 percent yoy.
The latest trade slowdown continues a downward trend seen since February.
Indonesia booked exports of $19.29 billion in April, down 17.62 percent from March, while imports tanked 25.45 percent on the month to $15.35 billion.
Imam said the prices of key export commodities such as palm oil, coal and nickel had risen in monthly terms but were down on the year, which may mark the end of the commodity windfall Indonesia enjoyed throughout 2022.
The decrease in coal and palm oil exports, he added, was a result of dwindling volumes, while the drop in iron and steel exports was due to lower global prices for those commodities.
"China's zero-emission policy affected coal demand in China, thereby affecting [Indonesia's] coal exports," said Imam, after attributing the trade cascade to "China's economic slowdown".
China's Purchasing Managers Index (PMI), which is surveyed regularly by S&P Global to measure business confidence, deteriorated for the first time in three months when it dipped to 49.5 in April from 50 in March.
That comes after China recorded GDP growth of 4.5 percent yoy in the first quarter of 2023.
The economic superpower has long been Indonesia's biggest trade partner. The two countries exchanged $8.8 billion worth of goods in April, with a significant though narrowing surplus for Indonesia.
Meanwhile, India is rapidly becoming a crucial trade partner for Indonesia and on the verge of displacing the United States as Indonesia's second-largest export destination. Bilateral trade amounted to almost $2 billion in April, with the balance strongly in Indonesia's favor.
Imam noted that the drop in Indonesia's trade last month was partly attributable to seasonal volatility as imports and exports had increased strongly in March ahead of Ramadan and Idul Fitri, leading to a drop-off in the following month.
In addition, the public holiday of more than a week around Idul Fitri certainly affected trade activity, Imam noted.
Concurring with that, Bank Permata chief economist Josua Pardede said the monthly drop in Indonesia's exports and imports was a result of fewer working days during Islam's main festive period.
This would be temporary, "implying that trade volume is likely to normalize", said Josua on Monday.
"Meanwhile, as commodity prices moderated, we expect the trade surplus in the full year of 2023 to be lower than in 2022. Thus, the current account surplus in the full year would also be lower than in 2022," he added.
He noted that a continued economic slowdown of China and the US would hit Indonesia's export performance and likely push down the trade surplus, which might result in lower GDP growth this year.
Bank Mandiri economist Faisal Rachman said exports were expected to continue declining going forward due to the normalization of commodity prices, driven by flagging global demand amid high inflation and ongoing policy rate hikes.
"We still anticipate that the trade surplus is inclined to continue narrowing, particularly in the second half of 2023," he said on Monday.
Faisal added, nevertheless, that "the trade surplus could last longer than anticipated", as the decline in commodity prices would be more gradual than previously expected thanks to China's economic reopening and the OPEC+ cut in oil production.
The rise in Indonesia's trade balance in April came as a surprise to some, with US-based Moody's Analytics earlier predicting a drop.