Current Account Deficit Improves In 3Q, And Surplus In Balance of Payments Continues

Economic Research	14 November 2016
Indonesia
Economic Highlights
Current Account Deficit Improves In 3Q, And Surplus In Balance of Payments Continues Indonesia’s current account deficit (CAD) in the balance of payments (BOP) decreased to USD4.5bn or 1.8% of GDP in 3Q, from a revised -USD5.0bn or -2.2% of GDP in 2Q. This was due to a smaller deficit in the services account and a larger trade surplus in the goods account, in line with increasing surplus in non-oil & gas trade. Higher deficit in the primary account and a lower surplus in the secondary account, however, partly offset the improvement. The financial account’s inflow, likewise, surged to USD9.4bn in 3Q from USD7.6bn in 2Q (+USD4.6bn in 1Q). This was due to higher inflows of foreign direct investment and a lower deficit in other investment As a result, the balance of payments surged to record a surplus of USD5.7bn in 3Q, from +USD2.2bn in 2Q and -USD0.3bn in 1Q. In 9M 2016, the current account deficit increased to USD14.3bn or 2.1% of GDP, from a deficit of USD12.6bn or 1.9% of GDP in 9M 2015. Going forward, we are of the view that the current account deficit will likely widen slightly to 2.2% of GDP in 2016 and further to 2.4% of GDP in 2017 but remain manageable, on the back of growing imports as the economy recovers. The financial account, however, is projected to record a larger surplus, leading to a surplus in the balance of payments in both years. Economist:  Rizki Fajar| +6221 2970 7065
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