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Indonesia still struggles to reduce trade deficit
Last year’s deficit has kept the government on its toes to seek trade deals to open new markets that could eventually boost export demand, authorities said in early 2019.
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The trade balance continued the negative trend of 2018, when a decline in exports, partly due to the trade war between the United States and China, contributed to an $8.6 billion trade deficit, the largest in 44 years. (Shutterstock.com/Lightspring)
T
he government has taken a number of steps, including the issuance of fiscal incentives, to cope with the country’s widening trade deficit, but such measures have yet to bear fruit as the deficit remains.
The year kicked off with a slow start, as Indonesia posted a US$1.16 billion trade deficit in January because of declining exports and low commodity prices, according to Statistics Indonesia (BPS). Exports decreased by 4.7 percent year-on-year (yoy) in January to $13.87 billion, while imports fell by 1.83 percent yoy to $15.03 billion.
The trade balance continued the negative trend of 2018, when a decline in exports, partly due to the trade war between the United States and China, contributed to an $8.6 billion trade deficit, the largest in 44 years.
“Fluctuating prices of commodities as well the general downturn in global [economic] growth have been affecting Indonesia’s trade balance,” BPS head Suhariyanto told a press briefing in January. “These factors will make 2019 a bigger challenge for Indonesia.”
Last year’s deficit has kept the government on its toes to seek trade deals to open new markets that could eventually boost export demand, authorities said in early 2019.
The Trade Ministry said in January that it had set a target to sign or at least conclude negotiations on 12 trade agreements, including the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) and preferential trade agreements (PTA) with African nations. As of November, Indonesia has concluded at least 11 trade agreements.
From January through November this year, Indonesia accumulated a $3.11 billion trade deficit, significantly lower than the $7.62 billion recorded over the same period last year, BPS data show. However, despite the decline in the deficit, it is unlikely for the country to record a trade surplus at the end of this year.
