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RI exports to remain sluggish
The slow recovery of the worldâs economy will continue to cast a shadow over Indonesiaâs exports as overseas demand for the countryâs commodities is likely to remain weak next year
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The slow recovery of the world's economy will continue to cast a shadow over Indonesia's exports as overseas demand for the country's commodities is likely to remain weak next year.
Trade Minister Gita Wirjawan forecast on Thursday that the country's total exports would amount to around US$180 billion in 2014, roughly the same level estimated for this year. He said that exports would be stagnant as demand from major trading partners such as the US and Japan would pick up only moderately.
'Overall, there will be some benefits for our exports from the global recovery. It will boost commodity prices and also increase demand for value-added goods. However, although there will be an improvement [in the global economy], it will not be of great significance,' Gita told The Jakarta Post in a text message. He added that the nation might record a deficit of up to $8 billion next year, similar to this year, driven largely by imports of crude oil.
The government is expecting total exports to drop by 6 percent to about $178.63 billion this year from $190.03 billion last year on weak overseas demand.
The Central Statistics Agency (BPS) reported an unexpected trade surplus in October thanks to an increase in exports and a decline in imports. During the month, Indonesia recorded a trade surplus of $42.4 million, compared
to a $657.2 million deficit the previous month.
Monthly exports increased 2.5 percent year-on-year to top $15.7 billion in October ' the first growth in exports in 19 months. Meanwhile, total imports declined 8.9 percent to stand at $15.6 billion.
BPS head Suryamin attributed the surplus to the sharp depreciation in the rupiah which made Indonesia's goods more competitive overseas. The weak rupiah also reduced imports as local businesses cut back on their overseas purchases as they became more expensive.
However, during the January'October period, the nation's total exports dropped by 5.46 percent to $149.66 billion from the previous year, while imports gained by 1.98 percent to $156.02 billion, causing a deficit of $6.36 billion.
Non-oil and gas exports declined by 3.01 percent to $123.19 billion, whereas imports also decreased by 4.4 percent to $118.92 billion, yielding a surplus of $4.27 billion during the January'October period.
Indonesia, Southeast Asia's largest economy, has seen a widening gap in its trade balance resulting from oil imports.
In the oil and gas sector, Indonesia suffered a deficit of $10.64 billion during the January'October period as exports dropped by 15.41 percent to $26.47 billion while imports rose by 6.69 percent to $37.11 billion.
To overcome the deficit from sizable oil imports, the government in June hiked fuel prices, but the impact has been limited, with imports, especially crude oil, remaining high.
Due to the sluggish recovery of the world economy, the World Trade Organization (WTO) recently cut its estimate for the growth in global trade to 2.5 percent this year and 4.5 percent next year from previous estimates of 3.3 percent and 5 percent respectively.
The Indonesian Institute of Sciences (LIPI) economist Latif Adam said that the nation's exports would slightly improve due to a combination of external and internal factors.
'On the external side, positive developments in the US and Japanese economies are encouraging, and they will affect exports by driving up demand for our manufactured goods. As the situation in China and India revives, that will also likely increase the demand for our commodities such as palm oil and coal,' he told the Post.
The Industry Ministry earlier this week said that manufacturing industry could expand by 6.4 percent, helped greatly by growth in the steel and base metal; automotive; textile; and footwear sectors. Latif said that rising prices would help increase the country's export earnings from commodities.
On the internal side, exports will get a boost from a fundamental change in the export structure resulting from the ban on the export of unprocessed ores. Exports of processed ores would lead to higher export earnings for the country, he said.
Latif added that the ban would not affect Indonesia's mineral exports as most of Indonesia's buyers would still buy processed mineral products from Indonesia due to limited supply from other countries.
