Indonesia expecting trade figures to worsen

Indonesia’s balance of trade figures for May are due to be released today, as the government struggles to reopen the

A nearly empty street in Jakarta

Photo: Reuters

Indonesia’s balance of trade figures for May are due to be released today, as the government struggles to reopen the economy amid the COVID-19 pandemic.

April’s balance of trade figures showed a $350 million deficit—the sharpest fall in Southeast Asia’s largest economy since 2016. In May, exports dropped by 18% compared to May 2019. However, this decline is expected to be mirrored by an even larger 24.5% fall in imports in the same period as domestic demand slumped under widespread lockdown measures, leading to less Islamic holiday shopping. Therefore, analysts expect a significant surplus in the balance of trade figures when they are announced later today.

On the surface, a surplus balance of trade is good news for Jakarta, as it indicates that the nation’s economy is attracting more in earnings than spending in payments to other economies. However, Jakarta is likely to be more worried about the drop in exports and imports as they indicate not only falling earnings but also weaker domestic demand. In the context of expectations of a recession this year for the previously fast-growing economy, the figures would lend credence to fears of a sluggish “U-shaped” recovery as Indonesia’s economy reopens in the coming months.

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