Indonesia suffers first-ever trade deficit
By Linda Yulisman,The Jakarta Post/ Asia News NetworkJAKARTA -- Indonesia suffered its first ever annual trade deficit in 2012 as shipments to most of the country's major trading partners fell during the year amid the slowdown in the global economy.
February 4, 2013, 12:00 am TWN
According to the latest data issued by the Central Statistics Agency (BPS) on Friday, the country's trade deficit reached US$1.65 billion last year, the first such deficit in Indonesia's history.
Exports dropped to US$190.04 billion, down 6.61 percent from a year earlier, deeper than the forecasts by most economists, who had expected to see a decline ranging between 5 percent and 6.5 percent.
Exports to almost all major trading partners declined. Exports of non-oil and gas products to China and Japan, for example, dropped by 3.39 percent and 6.4 percent to US$20.86 billion and US$17.23 billion respectively.
Imports, on the other hand, surged by 8.2 percent to US$191.67 billion, driven by imports of intermediary goods for local production (73.10 percent), followed by capital goods (19.90 percent) and consumer goods (7 percent).
Deputy Trade Minister Bayu Krisnamurthi said after the announcement that the unfavorable external situation in the global economy severely affected Indonesia's exports.
“We will maintain the target for exports at a similar level to last year, which we consider realistic. However, hopefully, ongoing developments in China and Japan will improve the outlook,” he told a press briefing in Jakarta.
Earlier, Trade Minister Gita Wirjawan said that Indonesia's exports could remain stagnant this year as major trading partners such as the United States and Japan and European countries might keep cutting demand.
Analysts also believe that export prospects will remain gloomy this year although there are signs of recovery in the country's leading trading partners, such as China and the U.S.
However, they estimate exports will increase only slightly and the rise may be still too small to bring the country's trade balance back into positive territory.
Latif Adam, an economist at the Indonesian Institute of Sciences (LIPI), said that Indonesia's exports would expand, albeit at a lower rate, thanks to economic recovery in Indonesia's major trading partners
In its latest forecast, the International Monetary Fund (IMF) predicts the global economy will grow by 3.5 percent in 2013 with fewer risks of policy mistakes and lower levels of financial stress.
“This will slightly push up demand for our commodities. In addition to this, we project that the government's move to extend exports to non-traditional markets will begin to generate outcome,” Latif said.
He estimated exports would increase by 9.22 percent this year, but the trade deficit would continue as imports would leap by 9.24 percent during the year. Latif predicted that the trade balance would remain in the red.