The country’s trade balance bounced back to surplus in May, beating economists’ forecasts, following a huge deficit the previous month as exports increased siginificantly, Statistics Indonesia (BPS) announced on Monday.

The surplus was recorded at US$210 million last month, which was in stark contrast to the $2.29 billion deficit recorded the previous month, the largest monthly deficit since 2013. The figure also stood in contrast to the $1.38 billion deficit median forecast according to a poll of 11 economists by Reuters prior to the release of the data.

Exports increased 12.49 percent month-to-month (mtm) to $14.74 billion in May, with non-oil and gas exports up to $13.63 billion in May from $12.37 billion in April.

On a monthly basis, the increase in exports was driven by animal or vegetable fats and oils, jewelry and mineral fuels, among other things. Imports, meanwhile, dropped 5.62 percent mtm to $14.53 billion last month, with non-oil and gas imports down from $13.16 billion in April to $12.44 billion last month.

Commodities such as garlic, ores, slag and ash as well as food waste for animal fodder were among the imports the figures of which increased in May compared to the previous month.

The surplus in the trade balance in May was also recorded thanks to the declining oil and gas trade deficit, which was down from $1.49 billion in April to $977.8 million last month, while the nonoil and gas balance booked a $1.18 billion surplus in May, reversing the $793 million deficit of the previous month.

The latest data brought the year-to-date (ytd) trade balance to a $2.14 billion deficit, a slight improvement compared to the $2.87 billion deficit booked over the same period last year.

With May’s surplus unable to overturn the ytd trade deficit, BPS head Suhariyanto said in Jakarta on Monday that the government had to improve export performance, particularly by diversifying export products away from raw commodities.

“[The government] needs to downstream [industry], diversify products and make exports more competitive, including by improving the logistics system as well as providing incentives,” said Suhariyanto.

Bahana Sekuritas economist Satria Sambijantoro said the monthly trade surplus in May could be extended to June as prolonged inactivity of the manufacturing sector during the Idul Fitri holiday had brought imports down, a trend that stretched back to 2016.

He estimated that if the monthly imports figure could be maintained at between $13 billion and $14.5 billion, it would narrow the current account deficit to Bahana’s forecast of 2.6 percent of gross domestic product this year and encourage Bank Indonesia to deliver a 100-basis points rate cut in 2019.

The decline in capital goods imports, however, signaled a possible slowdown in investment growth but should be welcomed by policymakers who were trying to rein in the current account deficit in the short-term, Satria said.

All types of imported goods recorded a yoy decrease in May. Imports of raw materials and auxiliary goods led the yoy decline of 19.13 percent in May, followed by the contraction of capital goods imports by 15.24 percent yoy.

While concurring with Satria that the decline in capital goods imports signaled weak investment growth in the near-term, Bank Central Asia chief economist David Sumual said the situation was worrying as it had been apparent since the end of last year.

David said the decline of capital goods imports in May, coupled with uncertainties surrounding the formation of the next Cabinet, which is set to be inaugurated in October, would disrupt investment momentum in the country.

He urged the government to swiftly improve its policies to attract more investment, particularly in manufacturing, with the hope that in the long run it would diversify both export products and destinations.

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