Trade balance reached $5.8 billion
Indonesia’s export sector beat market expectations, up 30.2% from the average forecast of 19.9% ​​year-on-year. Rising demand for energy products boosted exports by 61%, while shipments of products other than oil and gas increased by 28.7%.
Imports also posted a double-digit increase of 32.8%, only slightly higher than expected. Energy imports increased by 80.6% (fuel for road vehicles), while non-petroleum imports increased by 26.1% as economic activity continued to improve. The overall trade balance came in at $5.8 billion, much better than market expectations and the second highest on record.
IDR stable to limit BI rate hike prospects? Not So Fast
Rising demand for Indonesian exports has supported the economic recovery in many ways this year. Stronger exports have helped boost manufacturing activity, with the manufacturing PMI continuing to widen through 2022. Meanwhile, a 28-month trade surplus has supported the IDR and the currency remains relatively flat. stable relative to regional currencies. The coin has also experienced less devaluation compared to previous periods of intense financial market volatility, such as in 2018 or early 2020. The steady
IDR has eased the pressure on Bank Indonesia (BI) to ramp up interest rate hikes this year with the central bank raising only 25 basis points so far. Trade data today somewhat limited expectations that BI Governor Warjiyo will raise interest rates by 50 basis points next Thursday. However, with Warjiyo’s surprise rate hike last August, we cannot ignore BI to tighten the futures load (50 bps rate hike) in anticipation of a sharp increase in inflation after fuel prices get a raise.