Indonesia: Current Account surplus likely in 2021 – UOB

According to Economist Enrico Tanuwidjaja at UOB Group, Indonesia is likely to clinch a current account surplus this year.

Key Takeaways

“Indonesia’s current account balance reversed into a surplus of USD 4.5bn (1.5% of GDP), after posting a deficit of USD 2.2bn (-0.7% of GDP). As such, Indonesia’s also posted a balance of payment (BOP) surplus of USD 10.7bn in 3Q21, after a deficit of USD 0.4bn in 2Q21.”

“Indonesia’s trade balance hit a record high in October and reached USD5.7bn vs. USD4.4bn in the previous month, amidst faster pace of imports, notably for raw-auxiliary goods. Imports jumped to 51.1% y/y in October vs. 40.3% y/y in September. Meanwhile, exports rose 53.4% y/y in October vs. 47.6% y/y in September.”

“The capital and financial account (which records trade in assets between Indonesians and foreign counterparts) posted a larger surplus of USD6.1bn in 3Q21 (2.0% of GDP).”

“Portfolio investments maintained net inflows of USD 1.1bn, slightly lower than USD 4.4bn in the previous quarter in line with global uncertainty due to the spread of virus Covid-19 new variant in several countries.”

“For the first time ever since the past decade, in 2021 we  expect Indonesia to record a current account  surplus  and  reversed  the  persistent  deficit  position from several  years  in  a  row  since  the commodity  bust  back  in  late  2011-early 2012. We  forecast  Indonesia CA to record a surplus of 0.2% of GDP, primarily underpinned by the growth in exports.”



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