Indonesia's Trade Outlook July 2014

Trade Balance Still Under Pressure

§  Exports in May 2014 rose to US$ 14.83 bn (up by 3.73% m-o-m). Meanwhile imports in May 2014 (incl. trade zone) decreased to US$ 14.76 bn (down by -9.23% m-o-m). Furthermore, the monthly increase in exports largely due to the rise in the export of coal, CPO, chemical products, foot wear, and paper/paperboard. The fall in the month-on-month imports mainly due to the decrease in the import of non-oil & gas such as machinery & mechanical appliance, machinery & electrical equipment, iron & steel, plastics & the articles there of, chemical organic, vehicle & parts, the articles of iron & steel, and cotton. On a yearly basis, exports fell by -8.11% y-o-y in May 2014, while imports (incl. Trade Zone) also decreased by -11.43% y-o-y. The fall in the year-on-year exports indicates demand for Indonesia's exports in May 2014 was lower than in May 2013. The decreased in the year-on-year imports suggests relatively weakening domestic activity in May 2014 than in May 2013.

§  We expect Indonesia's exports may increase in June 2014. The increase in exports was due to the improvement in macroeconomic indicators countries of Indonesia's main trading partners. Furthermore, the improvement in the economic conditions of the countries of Indonesia's main trading partners such as the US, EU, Japan, and Singapore will boost demand for goods and services, which in turn also improves the performance of Indonesia’s exports. We expect Indonesia’s exports will increased to US$ 15.22 billion in June 2014 compared to May 2014, which reached US$ 14.83 billion.

§  Meanwhile, we expect Indonesia's import performance will increase in June 2014. The increase in imports is due to the increase in oil and non-oil imports to meet the increased demand for goods and services in order to Ramadan and Lebaran celebrations.  We expect Indonesia’s imports may rise to US$ 15.56 billion in June 2014 compared to US$ 14.76 billion in May 2014. Consequently, Indonesia’s trade balance is expected to deficit -US$ 0.34 billion in June 2014, worsening compare than a surplus US$ 0.07 billion in May 2014.