I

ndonesia suffered its first ever annual trade deficit in 2012 as shipments to most of the country’s major trading partners fell during the year amid the slowdown in the global economy.

According to the latest data issued by the Central Statistics Agency (BPS) on Friday, the country’s trade deficit reached US$1.65 billion last year, the first such deficit in Indonesia’s history.

Exports dropped to $190.04 billion, down 6.61 percent from a year earlier, deeper than the forecasts by most economists, who had expected to see a decline ranging between 5 percent and 6.5 percent.

Exports to almost all major trading partners declined. Exports of non-oil and gas products to China and Japan, for example, dropped by 3.39 percent and 6.4 percent to $20.86 billion and $17.23 billion respectively.

Imports, on the other hand, surged by 8.2 percent to $191.67 billion, driven by imports of intermediary goods for local production (73.10 percent), followed by capital goods (19.90 percent) and consumer goods (7 percent).

Deputy Trade Minister Bayu Krisnamurthi said after the announcement that the unfavorable external situation in the global economy severely affected Indonesia’s exports.

“We will maintain the target for exports at a similar level to last year, which we consider realistic. However, hopefully, ongoing developments in China and Japan will improve the outlook,” he told a press briefing in Jakarta.

Earlier, Trade Minister Gita Wirjawan said that Indonesia’s exports could remain stagnant this year as major trading partners such as the United States and Japan and European countries might keep cutting demand.

Analysts also believe that export prospects will remain gloomy this year although there are signs of recovery in the country’s leading trading partners, such as China and the US.

However, they estimate exports will increase only slightly and the rise may be still too small to bring the country’s trade balance back into positive territory.

Latif Adam, an economist at the Indonesian Institute of Sciences (LIPI), said that Indonesia’s exports would expand, albeit at a lower rate, thanks to economic recovery in Indonesia’s major trading partners

In its latest forecast, the International Monetary Fund (IMF) predicts the global economy will grow by 3.5 percent in 2013 with fewer risks of policy mistakes and lower levels of financial stress.

“This will slightly push up demand for our commodities. In addition to this, we project that the government’s move to extend exports to non-traditional markets will begin to generate outcome,” Latif said.

He estimated exports would increase by 9.22 percent this year, but the trade deficit would continue as imports would leap by 9.24 percent during the year. Latif predicted that the trade balance would remain in the red.

Indonesia, one of the world’s biggest producers of key commodities, relies heavily on such raw materials to boost exports. Exports of palm oil, rubber, coal and other mineral commodities dropped significantly last year due to a global plunge in commodity prices.

Anton Hendranata, Bank Danamon’s chief economist, sees a positive outlook for Indonesia’s trade this year, saying that exports might surge by 6.4 percent, with imports rising by 7.5 percent.

“Exports will benefit from recovery in China, which has seen its economy start to pick up by 8 percent, and that will help raise commodity prices as well as volumes,” he said.

The brighter prospect for exports will partly be supported by the depreciation of the rupiah, which will make Indonesia’s goods more competitive in foreign markets.

On the other hand, imports of capital goods, such as heavy equipment, may decline due to slowing production activities.

The rupiah, which was the worst-performing currency in Asia last year, fell as low as Rp 9,778 per dollar before closing 0.3 percent higher on Friday at Rp 9,713, according to bank prices compiled by Bloomberg.