Cumulative trade balance surplus surpasses peak of the commodity boom period in 2011

19 Oct 2022

Source: Fiscal Policy at the Ministry of Finance of the Republic of Indonesia

Link to original article HERE


Indonesia's exports recorded another positive performance in September 2022 with a value of US$24.8 billion, an increase of 20.28% compared to the same period last year. Oil and gas as well as non-oil and gas exports, which grew at a high rate of 41.8% (yoy) and 19.26% (yoy) respectively, were the drivers behind the increase.  


Despite a slowdown on a monthly basis due to decreases in prices and sales volumes of leading commodities, Indonesia’s total exports continued to increase. Exports in the January to September 2022 period reached $219.35 billion, an increase of $55 billion compared to the same period last year ($164.32 billion).  


"The cumulative increase in exports shows that global demand is still strong and is in line with the pandemic becoming more under control. The strengthening of export demand mainly come from several of Indonesia's main trading partner countries such as India, Japan, and South Korea," said Mr. Febrio Kacaribu, Head of Fiscal Policy at the Ministry of Finance. 


In cumulative terms, oil and gas exports grew significantly at 38.56% (ytd). Non-oil and gas exports also recorded a growth of 33.21% (ytd). From a sectoral perspective, the mining sector recorded the highest growth of 91.98% (ytd), followed by the manufacturing sector with 22.23% (ytd) – in line with the country’s recent global Manufacturing Purchasing Managers’ Index (PMI) scores of above 50 – and the agricultural sector, which grew 15.38% (ytd).  


"Consistent growth in all sectors shows a balanced recovery between the oil and gas and non-oil and gas sectors vis-à-vis the volume factor following increased demand from several main destination countries and the effect of commodity prices,” Mr. Kacaribu added.  


Indonesia’s imports in September 2022 also recorded a positive performance of $19.81 billion or a growth of 22.01% (yoy). Though imports slowed down on a month-to-month basis, the continued expansion of the manufacturing sector as reflected in the Indonesian Manufacturing PMI in September 2022 still succeeded in driving import growth in annual terms.  


On September 2022, Indonesia recorded an 83.53% (yoy) growth in oil and gas imports, as well as a 14.02% (yoy) growth in non-oil and gas imports. From January to September 2022, total imports reached $179.49 billion. In terms of usage, imports of raw materials and capital goods grew by 23.21% (yoy) and 41.13% (yoy) respectively. “Growth in these two categories shows that economic activity in terms of production is still running well,” said Mr. Kacaribu.  


In regard to imports of consumer goods, there is a cumulative growth of 3.52% in the January to September 2022 period or a decrease 11.17% on an annual basis due to price increases. “The strengthening of public consumption activities will continue to be maintained through state budget instruments and price stabilization policies, social protection, and other means,” Mr. Kacaribu continued.  


The increase in export and import components translates to a trade balance surplus of $4.99 billion in September 2022, or a cumulative trade balance surplus of $39.87 billion. This is much higher than the trade balance surplus at the peak of the commodity boom period in Indonesia in 2011, which amounted to $22.2 billion. This also marks the 29th consecutive month of trade surpluses for the archipelago. On a quarterly basis, improved net export performance should drive GDP growth in the third quarter of 2022 and the year 2022 as a whole, he said. 


Going forward, Mr. Kacaribu said the government and relevant authorities would continue to anticipate various global risks that could affect the trade balance and the national economy in general. These include the slowdown in international trade activities in developed countries, which are affected by inflation as stated in the World Economic Outlook issued on October 2022 by the IMF, as well as trade activities with major partners such as China. In addition, he said Indonesia would further diversify its product portfolio and trade partner countries. “Export expansion, aside from Indonesia’s main export destination countries such as the Philippines and Malaysia, has shown significant increase throughout the year,” Mr. Kacaribu concluded.