Indonesia suffers first trade deficit in nearly 2 years

Asian News Network, Hans David Tampubolon and Linda Yulisman, The Jakarta Post,02-06-2012

Indonesia’s trade balance plunged into the red in April for the first time in nearly two years due to the unexpected drop in exports during the month, a national statistics agency announced yesterday.

The Central Statistics Agency (BPS) revealed that the country suffered a trade deficit of US$641.1 million in April of this year after recording a surplus of $920 million in January, $692.8 million in February and $840 million in March.

Imports rose 11.65 per cent on a yearly basis to $16.62 billion, while exports declined by 3.46 per cent to $15.98 billion during the same month, the first time since September 2009. The drop in exports had caused the first trade deficit since July 2010.

BPS statistics director Satwiko Darmesto said that the slide in exports was particularly driven by dwindling international demand for Indonesian natural commodities during the month.

"Declining demand affected coal and crude palm oil exports,” he said during the announcement, attributing the lower demand for palm oil to India and China, the largest buyers of the commodity.

Exports of mineral fuel, mainly coal, were down 6.8 per cent to $2.43 billion in April from March, while exports of fat and vegetable oil, especially palm oil, dropped by 19.21 per cent to $1.76 billion from a month earlier, statistics show.

Other commodities, such as natural rubber and copper, also suffered from slowing demand, Satwiko added.

The decline in exports was also likely caused by the fall of commodity prices in international markets since the end of this year in addition to overall weaker demand from major export destinations, Institute for Development of Economics and Finance executive director Enny Sri Hartati said.

She said that the fall in exports was partly caused by decline in orders from China, which has started to feel the pinch of the economic crisis in Europe. “This trend will continue in the future,” she added.

Apart from this, the domestic industry’s dependence on imported raw materials and intermediary goods for production would put more pressure on the trade balance due to surging imports in the future, Enny further said.

China’s economy is highly exposed to the situation in Europe, the epicenter of the current global economic crisis. China’s economy, which greatly depends on exports, expanded by 8.1 per cent during the first quarter of this year, reaching its slowest pace since 2009.

The BPS data showed that non-oil-and-gas exports to China dropped by 0.5 per cent to $2.05 billion in April from a month earlier. Non-oil exports to Japan, one of Indonesia’s top export destinations, fell by 15.18 per cent to $1.43 billion, joining the US, South Korea and the EU in the list of Indonesia’s ailing trading partners.

Exports to the EU have been slowing down since the last quarter of last year, while exports to the US and South Korea, have decelerated since the first quarter of this year. Despite the slower export growth, China, Japan and the US remained the country’s largest export destinations for non-oil-and-gas goods, settling at $2.05 billion, $1.22 billion and $1.12 billion respectively.