Indonesia trade balance has deteriorated in April 2013. If in March 2013, Indonesia trade balance posted a surplus of USD 0.1 billion, conversely the economy relapsed into a trade deficit of USD 1.6 billion in April 2013. The deterioration in trade balance is attributable to the surge in imports by 9.6%. The rise in the value of imports is in part as a result of a surge in non oil imports from USD 11 billion to USD 12.7 billion, meanwhile, oil imports registered a decrease of USD 0.3 billion or 7.7%. The decrease in exports from USD 15.02 billion to USD 14.7 billion is another factor that contributed to the drop in the trade balance in April 2013.
Figure 13: Indonesia Trade Balance, January 2008 – April 2013
Indonesian Trade Balance falls into deficit once again.
Source: BPS and CEIC (2013)
Compared with the position in April 2012, Indonesian trade balance in April 2013 has deteriorated. The trade deficit increased from USD 0.8 billion in April 2012 to USD 1.6 billion in April 2013. Factors attributable to the deterioration in the trade balance, among others, include a decrease of 9.1 % in value of exports of which oil and gas exports contracted by 32.9% and non oil and gas exports decreased by 2.4%.
In general, the performance of trade balance during January – April 2013 decreased compared to the same period in 2012. The trade balance, which initially registered a surplus of USD 2 billion during January – April 2012 dropped into deficit of USD 1.9 billion during January – April 2013. The decrease in trade balance is in the main attributable to the fall in the value of exports from USD 64.7 billion during January – April 2012 to USD 60.1 billion in the same period in 2013. The decrease in exports indicates marked deterioration in the competitiveness of Indonesian products in international markets and the effect of lingering weakness in the global economy.
Figure 14: Indonesia Oil and Gas Exports – Imports, January 2008 – April 2013
Indonesia continues to experience a trade deficit of oil and gas.
Source: BPS and CEIC (2013)
Indonesia trade balance continued to post a deficit in April 2013. A trade deficit of oil and gas rose from USD 1 billion in March 2013 to USD 1.2 billion in April 2013. The rise of deficit in Indonesia trade balance of oil and gas was attributable to a decrease in oil and gas exports from USD 2.9 billion in March 2013 to USD 2.4 billion in April 2013. The underperformance of oil and gas exports was is in part caused by 21.9% decrease in crude oil exports, 20.47% contraction in oil and gas derived exports and 15.9% drop in gas exports. In the meantime, the performance of oil and gas exports in April 2013 also deteriorated, if compared to the same period in the previous year. The deficit in Indonesia trade balance of oil and gas increased from USD 0.5 billion in April 2012 to USD 1.2 billion in April 2013.
Poor performance of the oil and gas export sector is also attributable to falling prices of Indonesian crude oil exports from USD 107.42 per barrel in March 2013 to USD 104.19 per barrel in April 2013. The fall in prices of Indonesian crude oil reflects the downward trend in prices of crude oil on international commodity markets. Crude oil prices at WTI (Nymex) dropped from USD 92.96 per barrel to USD 92.07 per barrel or prices of Brent (ICE), which decreased from USD 109.54 per barrel to USD 103.43 per barrel in the same period. The fall in prices of petroleum oil prices is largely attaributable to an increase in supply of crude petroleum oil on the International market. Production of crude petroleum oil increased from 90.83 million barrels per day in Marct 2013 to 91.26 million per day in April 2013. The production of crude oil in Indonesia, though still below the target set in APBN 2013 (900,000) barrels per day, increased on average to 890,000 barrels per day in Q1 2013.
Overall, the deficit in trade balance of oil and gas increased from USD 1.1 billion during January-April 2012 to USD 4.6 billion in January-April 2013. This is also attributable to an increase of 3.2% in oil and gas imports as well as an decrease of 22.2 % in oil and gas exports.
Figure 15: Indonesia Non Oil and Gas Export – Imports, January 2008 – April 2013
The performance of Indonesia non oil and gas export-imporrts has deteriorated once again
Source: BPS and CEIC (2013)
In April 2013, Indonesia registered a trade deficit of USD 0.41 billion in the non oil and gas trade sector, which followed a surplus of USD 1.1 billion in March 2013. Th rise in non oil and gas deficit was attributable to 15.8 % in non oil and gas imports increase, which could not be offset by an increase of 1.7% in non oil and gas exports.
Compared to the condition in April 2012, which posted a deficit of USD 0.2 billion, the deficit in trade balance of non oil and gas in April 2013 showed a slight increase that registered USD 0.4 billion. Worsening Indonesia trade balance of non oil and gas deficit is largely attributable to a decrease of non oil and gas exports, amounted for 2.4 % between April 2012 and April 2013.
Overall, the performance of non oil and gas trade balance in April 2013 showed deterioration from the same period in the previous year. During January-April 2013, non oil and gas trade balance recored a surplus of US$ 2.7 billion, which was lower than the surplus of USD 3.1 billion recorded during January-April 2012 period. The decrease of 3% in non oil and gas exports compared with the same period in Janaury-April 2012 is considered to be the main factor responsible for the decline in performance.
During January – April 2013, exports of 10 categories of goods which comprise crude petroleum oil; fats and fatty acids; machinery /electric appliances; rubber and rubber products; machinery /mechanicalinstruments; iron, kerak and iron dusts; vehicles and components; garments; shoes; timber, wooden products contributed 62.10% of non oil and gas exports.
Figure 16: Current Account, 2006:Q1 – 2013:Q1
The current account deficit has decreased once again
Source: Bank Indonesia and CEIC (2013)
In Q1, 2013, the current account deficit showed 31 % decrease compared with the position in the previous quarter. Indonesia registered current account deficit of USD 5.3 billion in quarter I, 2013, which was a significant decrease from USD 7.6 billion recorded in the Q4 2012. The decrease in the current account deficit is attributable to an increase in the trade surplus from USD 0.8 billion in Q4 2012 to USD 1.6 billion in Q1 2013. To that end, improvement in the balance of trade and income contributed to a reduction in the current account position.
Meanwhile, the performance on the current account in Q1 2013, if compared to Q1 2012, showed marked deterioration. The current account deficit increased from USD 3.1 billion in Q4 2012 to USD 5.3 billion in Q1 2013. Rising current account deficit in Q1 2013 is attributable to 57% (YoY) decrease in the trade balance of goods and 11.5% (YoY) increase in the balance of trade.
Figure 17: Capital and Financial Accounts, 2006: Q1 – 2013:Q1
Capital and financial accounts, which initially was in surplus, descended drastically into a deficit
Source: Bank Indonesia and CEIC (2013)
The position of capital and financial accounts in the Q1 2013 marked a drastic deterioration. Capital and financial transactions decreased drastically from a surplus of USD 11.9 billion in Q4 2012 to a deficit of USD 1.4 billion in Q1 2013. The deterioration in the performance of the capital and financial transactions is attributable to weakness in Other investments item which moved from a surplus of USD 7.2 bilion in Q4 2012 to USD 7.7 billion in deficit, which is a direct consequence of an increase in offshore savings by domestic banks.
The increase in the level of domestic bank foreign currency assets is a direct response to the policy implemented by Bank Indonesia that involved taking control of all available foreign currency to finance oil and gas imports. To that end, the intervention by Bank Indonesia to supply foreign currency which Pertamina needs to spend on oil and gas imports is expected to reduce the demand for foreign currency. The decrease in the demand for foreign currency in the domestic economy, in turn expected to mitigate the down ward pressure on Rupiah, thereby reducing its variability. As a response, domestic banks found themselves with alot of excess liquidity in foreign currency, which they deposited offshore.
Overall, the performance of capital and financial transactions, in Q1 2013, is not any better than the position in Q1 2012. In Q1 2012, capital and financial transactions registered a surplus of USD 2.1 billion. The main cause of the deterioration in the performance of then capital and financial transactions is the increase in the deficit recorded in the Other Investments category from USD 2 billion in Q1 2012 to USD 7.7 billion in Q1 2013.
Figure 18: Indonesia Balance of Payments, 2006:Q1 – 2013:Q1
The Balance of Payments, which initially was in surplus, descended into a deficit
Source: Bank Indonesia and CEIC (2013)
In Q1 2013, Indonesian balance of payments position registered a deficit of USD 6.6 billion, from a surplus of USD 3.2 billion in Q4 2012. Weakening performance of the balance of payments in Q1 2013, is attributable to a deficit on capital and financial transactions (USD 1.4 billion), from a surplus of USD 11.8 billion in the previous quarter.
Overall, the balance of payments position in Q1 2013 shows deterioration from the Q1 2012. The balance of payments deficit increased from USD 1 billion in Q1 2012 to USD 6.6 billion in Q1 2013. Factors which contributed to weakening balance of payments in Q1 2013 include an increase in the current account deficit from USD 3.1 billion in Q1 2012 to USD 5.3 billion in Q1 2013, and poor performance of capital and financial accounts which moved from a surplus of USD 2.1 billion to USD 1.4 billion in deficit in quarter I-2013.