JAKARTA: Indonesia’s foreign trade surprisingly swung back to a surplus in May, against market expectations of a US$1.38bil deficit, spurring some hopes for improvement in the country’s trade outlook despite the Sino-US trade war.
South-East Asia’s largest economy had a US$207.6mil surplus for May, the statistics bureau said, as imports dropped near the end of the Muslim fasting month.
This followed a trade gap in April that was the widest in Indonesia’s history, at US$2.44bil, partly due to rising demand for imported consumer goods ahead of Ramadan, the fasting month, which began in May and ended in early June.
“The trend of bils of dollars of trade deficit is behind us,” said Satria Sambijantoro, Bahana Sekuritas economist and the only one of 11 analysts in the Reuters poll who expected a May surplus.
He said that last month’s decline in exports was not as sharp as initially expected due to better sales of manufactured goods, while the pace at which imports declined did not indicate a major economic slowdown.
In May, exports dropped 8.99% from a year earlier to US$14.74bil, versus the poll’s forecast of a 14.7% fall.
May’s decline reflected falling earnings from mining products as well as oil and gas.
On a monthly basis, exports picked up 12.42% on higher sales of processed food, including palm and coconut oils, jewellery and clothes.
Imports slid 17.71% in May from a year earlier to US$14.53bil, compared to the 13.9% drop predicted in the poll.
Purchases of everything from consumer goods, raw materials to capital goods fell.
The May trade data did not move the rupiah.
Indonesian exports and imports have been falling for months, in line with global trade amid the US-China trade war.
Sambijantoro said there could also be a trade surplus for June as imports usually drop further during the holiday season at the end of Ramadan.
However, statistics bureau chief Suhariyanto warned that slowing economic growth in Indonesia’s main trading partners, like China, poses a risk to export expansion.
“There are real challenges in boosting exports,” he said, adding that commodity prices are also volatile.— Reuters