Figure 13: Indonesia Balance of Payments Position, 2011:Q2-2014:Q2 (USD Billion)
Indonesian Balance of payments has registered improvement
Source: Bank Indonesia and CEIC (2014)
Indonesian balance of payments in quarter II-2014 has improved. The Surplus on the balance of payments had increased by 107.95% from the previous quarter to reach USD 4.3 billion. Based on year-on-year calculation, the balance of payments position as this edition went to press was far better than the condition in quarter II-2013, which posted a deficit of USD 2.48 billion. During this quarter, the increase in the surplus was attributable to the surplus on the capital and financial account which was larger than the deficit registered on the current account. The surplus on the capital and financial account rises to USD 1.9 billion, larger than the increase in deficit registered on the current account.
The deficit on the current account soared in quarter II-2014. The deficit of the current account increased by USD 4.15 billion in quarter I-2014 to reach the level of USD 9.11 billion. The rise in the deficit was as a result of deterioration of the balance of trade in goods, balance of trade in services, and the primary income balance. With regards to the balance of trade in services, the deterioration was attributable to the increase in the use of imported freight and foreign financial services. Meanwhile, with respect to primary income balance, the deterioration in performance was attributable to the increase in government obligations to foreign direct and portfolio investments in Indonesia that reached USD 1.19 billion.
The surplus on the capital and financial account in quarter II-2014 registered an increase. In quarter II-2014, the surplus on the capital and financial account was USD 14.51 billion, which in percentage terms represented an increase of 89.78% over the surplus registered in quarter I-2014 (USD 7.65 billion). The position on the capital and financial account by and large rises whenever the net flow of foreign direct investment as well as ‘other investments’ register a surplus. The same is evident if viewed on a y-o-y basis, whereby the surplus on the Indonesian capital and financial account posted an increase of 68.23% (surplus in quarter II-2013 was USD 8.63 billion).
Figure 14: Balance of Trade in Goods 2011:Q2-2014:Q2 (USD Billion)
Balance of Trade in goods fell into deficit once again
Source: Bank Indonesia and CEIC (2014)
After recording a surplus in three quarters, the trade balance of goods fell back into deficit. During the last quarter, the balance of trade in goods posted a relatively large surplus of USD 4.7 billion and USD 3.35 billion in quarter IV-2013 and quarter I-2014, respectively. However, during quarter II-2014, the balance of trade in goods plunged into deficit of USD 0.47 billion due to contraction in the surplus registered on the balance of trade in the non-oil and gas sector. Besides, the surge in the deficit on the balance of trade in oil and gas also contributed to the deterioration in the Indonesian balance of trade of goods. it is said, the condition registered in quarter II-2014, was better than the deficit of USD 0.56 billion registered in quarter II-2013.
The surplus on the non-oil and gas in quarter II-2014 was a half of that registered in the previous quarter. During quarter I-2014, the level of surplus on the non-oil and gas account was USD 5.58 billion, which has since registered a decline of USD 3.19 billion to reach USD 2.39 billion (contraction of 57.2% q-to-q). The decline in surplus was as a consequence of an upsurge in non-oil and gas imports (USD 3.74 billion) which was higher than the increase in non-oil and gas exports (USD 0.55 billion). The highest increase in non-oil and gas imports (q-to-q) was registered in coffee beans (310.06%), and followed by resin and resin gums (306.32%).
The deficit on oil and gas balance surged once again in quarter II-2014. During quarter I-2014, the deficit on the oil and gas sector was USD 2.75 billion, but has since soared to USD 3.19 billion, which represents an increase of 16.08%. The increase q-to-q above was relatively lower that y-o-y growth that reached the magnitude of 51.66%. The rise in the deficit was attributable to the surge in the value of oil and gas imports (USD 0.45 billion) and contraction in the value of gas exports (USD 0.47 billion). Thus, the increase in the exports of crude oil and refinery products was not enough to offset the surge in the value of imports.
Table 7: Exports-Imports of Indonesia by Region in 2014 (USD Billion)
Indonesia registered a deficit on the balance of trade with Asia region
Source: Bank Indonesia (2014)
In quarter II-2014, Indonesia registered negative net exports with large trading partners, Asia Region. After recording a trade surplus of USD 1.13 billion, in the previous quarter (I-2014), Indonesia fell back into a deficit of USD 4.25 billion with Asia. The same applies to the performance of trade with other regions such as Australia-Oceania and Africa, Indonesia also registered negative net exports of USD 0.16 billion and USD 0.67 billion. Nonetheless, Indonesia registered positive net exports with America and Europe region of USD 1.15 billion and USD 0.64 billion, respectively.
Indonesian exports to all regions were raise with the exception of Africa. Indonesian exports to Africa registered 13.86% growth in quarter II-2014 compared with the previous quarter. The largest increase in exports was registered in Indonesian trade with Australia-Oceania Region (4.56%), followed by trade with America Region (2.31%). Overall, Indonesian exports registered growth of 0.59% from USD 43.94 billion (quarter I-2014) to USD 44.2 billion (quarter II-2014).
Based on q-to-q trajectory, Indonesian imports from all regions registered positive growth. Indonesian Imports from Africa increase by 84.20%, followed by imports from America region, which recorded growth of 28.46%. Meanwhile, Indonesian imports from Europe registered the smallest growth of 6.9%. However, Asia is still the largest source of Indonesian imports to the tune of USD 34.75 billion in quarter II-2014.