Amid the economic slowdown, Indonesia has extended its trade surplus to US$1.33 billion in July, caused by a decline in imports, the Central Statistics Agency (BPS) announced on Tuesday.

BPS deputy of production statistics Adi Lumaksono told a press conference on Tuesday that the country'€™s imports fell 22.3 percent yoy in July to $10 billion from the same month last year, contributed to by the drop in non-oil and gas imports that plunged 21.4 percent year-on-year (yoy) and decline of oil and gas imports by 45 percent yoy.

The fall in imports helped the country record a surplus of $1.33 billion in July, the seventh monthly surplus recorded since January. With the July figure, the combined trade surplus enjoyed over the six consecutive months reached $5.73 billion.

Adi said the trend of growing surplus could still continue if decline of imports was higher than decrease of exports.

'€œWe still hope exports will increase as the government boosts infrastructure,'€ Adi said.

Meanwhile, the country'€™s exports in July decreased by 15.5 percent to $11.4 billion on a month-on-month (mom) basis from June or a 19.23 percent drop year-on-year from the same month last year.

'€œThe July exports decline was caused by decreases in oil and gas exports by 1.26 percent to $1.42 billion and non-oil and gas by 17.23 percent to $9.98 billion,'€ Adi said.

The largest decrease in July exports was contributed by a 18.8 percent drop to $339 million in shipment of animal fat and vegetable oil, while exports of mineral-based fuel rose by 3.4 percent to $43.3 million, the agency'€™s data shows.

Based on sector, non-oil and gas exports in manufacture, mining and others decreased by 7.65 percent and 8.84 percent respectively in the Jan.-July period, while agricultural products posted a slight increase of 0.02 percent.

The US was Indonesia'€™s top destination for non-oil and gas exports in June with $1.17 billion, followed by China ($1.1 billion) and Japan $1 billion, while exports to the EU stood at fourth place with $1.1 billion.

In July, overall exports declined 12.8 percent yoy to $89.7 billion, despite a 5.91 percent increase mom in June, creating a major challenge for the government to reach its 28 percent export growth target this year.

The economy shrank to its lowest level in six years in the past few quarters, with the latest first quarter reading showing 4.7 percent growth, a level unseen since 2009.

Commenting on the performance, Barclays Singapore analysts Wai Ho Leong and Angela Hsieh said the fall in imports, which increased a trade surplus, was partly seasonal in the wake of Ramadhan festivities, but consumer sentiment remains on the weak side.

'€œThe lack of government spending until mid-April has had significant spillover effects on the economy. However, we believe President Jokowi'€™s recent cabinet reshuffle would help speed up investment spending,'€ the analysts said.

Despite a continuous surplus, Indonesia is in '€œthe depths of Asia'€™s trade recession'€ due to a weak trade data, which does not bode well for a rebound in growth in the second half of the year, according to Glenn Maguire, ANZ chief economist for South Asia, ASEAN and the Pacific, and Daniel Wilson, ANZ economist for ASEAN and the Pacific.

'€œBank Indonesia [BI] is in an increasingly tough position with a vocal desire to not allow their currency to depreciate and the economy is clearly trending below potential. BI needs to take a more dovish stance on the economy, but they must also balance the expected impact on the currency,'€ Maguire and Wilson said in a written statement.

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