Indonesia’s recent trade figures suggest signs of economic growth. August exports increased to US$12.6 billion, a 32.5 percent increase month-on-month (mom) and a 0.7 percent decline year-on-year (yoy), mainly caused by higher non-oil and gas exports worth US$11.5 billion, which rose 34.8 percent mom or 2.8 percent yoy. Oil and gas exports also surged to $1.1 billion, up 12.9 percent mom but down 26.3 percent yoy, led by higher exports of refined oil at 35.4 percent mom, crude oil at 19.9 percent mom and gas at 5.2 percent mom.

Accelerated exports of non-oil and gas commodities were contributed to by ores, crusts and metals amounting to about $300 million (which surged 151.95 percent mom), machines and mechanical planes (up 54.5 percent mom) and jewelry (up 52.6 percent mom).

Volume-wise, export volumes accelerated 14.9 percent mom or 7.5 percent yoy, driven by oil and gas export volumes, which grew 10.1 percent mom supported by higher gas procurement exports by 197.9 percent mom, refined oil by 52.5 percent mom and crude oil by 21.5 percent mom.

Moreover, aggregate export prices surged 15.3 percent mom, led by increases in prices for non-oil and gas of 16.9 percent mom (down 5.3 percent yoy) and oil and gas at 2.6 percent mom (down 24.5 percent yoy).

August imports were 36.8 percent higher mom to $12.3 billion, or down 0.5 percent yoy, mainly led by imports of oil and gas at 16.5 percent mom, or dropping by 16.7 percent yoy, and non-oil and gas imports at 40.9 percent mom (up 2.8 percent yoy). While the monthly growth was attributed to July’s seasonal low volumes caused by Lebaran, the trend in imports remains positive (exhibit 1).

Improved imports of non-oil and gas was supported by the acceleration of waste of food industry by 74.1 percent mom, vehicles by 49.9 percent mom and plastics and plastic products by 49.5 percent mom.

On the flip side, oil and gas imports were contributed to by higher refined oil (up by 24 percent mom), gas (up by 13.2 percent mom) and crude oil (up by 7.6 percent mom).

By category of imports, raw materials accounted for 73.8 percent of total imports, worth $9.1 billion, jumping 32.8 percent mom. This was followed by capital goods at $2.1 billion (up 41.2 percent mom) and consumption goods at $1.2 billion (up 60.4 percent mom).

Overall, this resulted in a positive trade balance of $293.6 million, compared with Rp 513.6 million in July, with non-oil and gas trade balance at $921.3 million, versus $1,021.3 million in July, and oil and gas trade balance at a deficit of $627.7 million, from a $507.7 million deficit in July.

For January to August, total trade balance reached $4.3 billion, compared with $6.2 billion in the same period a year ago, with significant improvements from higher commodity prices, especially crude palm oil (CPO) and coal. Overall, the growth pattern of exports and imports continue to indicate economic recovery (exhibit 1), especially on recovery of capital and raw materials imports (exhibit 2).

Positive developments in export prices lead us to continue to expect a 2 percent current account deficit in 2016 and another solid set of trade balance data in September. This should lead to sustained positive sentiments for both the currency as well as equity and bond markets.

____________

The writer is an economist at Bahana Securities.

--------------

To receive comprehensive and earlier access to The Jakarta Post print edition, please subscribe to our epaper through iOS' iTunes, Android's Google Play, Blackberry World or Microsoft's Windows Store. Subscription includes free daily editions of The Nation, The Star Malaysia, the Philippine Daily Inquirer and Asia News.

For print subscription, please contact our call center at (+6221) 5360014 or subscription@thejakartapost.com

Popular

Jakarta's minimum wage bump faces disappointed laborers

Profound budget policy changes failed to lift growth in 2025

Analysis: Prabowo targets electoral reforms to consolidate power