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Current account deficit to narrow in Q1 as pandemic disrupts trade, tourism: BI
Bank Indonesia expects the current account deficit to reach 1.5 percent in the first quarter this year, lower than an earlier projection of 2.5 to 3 percent
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Sterilization: A worker sprays disinfectant at an empty Sanur Beach tourist site in Denpasar, Bali, on March 15, 2020. (JP/Zul Trio Anggono)
B
ank Indonesia (BI) is projecting the current account deficit to reach 1.5 percent in the first quarter this year, lower than an earlier projection of 2.5 to 3 percent, as COVID-19 disrupts trade and tourism activities.
BI Governor Perry Warjiyo said the current account deficit would remain lower than the initial projection this year based on three factors, namely a better-than-expected trade surplus, lower import costs and a decline in tourism activities.
“The first factor is that imports fell much faster than exports because of slowing domestic production and weak global demand while the second factor is that import costs have become much cheaper due to reduced logistics and insurance costs,” Perry told reporters on Friday.
“The third factor is that global restrictions, including the pilgrimage ban and foreign travel ban, have wiped out not only tourism revenue” but also prevented Indonesians from going abroad, he added.
“This has reduced the use of foreign exchange for Indonesian tourists.”
Indonesia booked a US$743 million trade surplus in March as export and import activities contracted slightly amid the COVID-19 pandemic, Statistics Indonesia (BPS) data shows.
A total of $14.09 billion in exports was recorded in March, a 0.2 percent decrease year-on-year (yoy), while total imports fell 0.75 percent yoy to $13.35 billion driven by decreased imports of capital goods.
The country’s tourism industry has been badly hit by the coronavirus pandemic. More than 1,260 hotels have closed in the country, affecting more than 150,000 employees, according to the Indonesian Hotel and Restaurant Association (PHRI).
