Indonesia: Trade risks and structural support – UOB

UOB economists Enrico Tanuwidjaja and Vincentius Ming Shen assess Indonesia’s June 2026 trade data, highlighting that the trade deficit narrowed as stronger non-oil and gas exports partly offset rapid import growth. They flag emerging near-term twin-deficit risks involving the current account and fiscal balance, while arguing that downstream industrialisation and energy-security initiatives should support longer-term external sustainability.

Trade deficit narrows but risks rise

"Looking ahead, Indonesia's external position will likely remain vulnerable to geopolitical developments and energy market fluctuations."

"Consequently, Indonesia faces an elevated risk of a near-term twin deficit scenario, with pressures emerging simultaneously from both the fiscal and current account balances."

"Nevertheless, ongoing downstreaming initiatives and energy security programmes should strengthen the economy's structural resilience over the longer term, improving external sustainability and reducing dependence on volatile commodity cycles."

"From a macroeconomic perspective, the recent trade deficit should not be viewed entirely negatively."

"A significant portion of the import surge reflects capital formation and industrial development, which are supportive of Indonesia's long-term growth potential."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)