UOB Group’s Economist Enrico Tanuwidjaja, Haris Handy and Yari Mayaseti review the latest current account data in Indonesia.
Key Takeaways
“Indonesia’s current account posted a deficit (CAD) of USD2.2bn (-0.8% of GDP), after posting USD1.1bn (-0.4% of GDP) deficit in the previous quarter. The development was attributable to a higher primary income deficit in line with an increase of yield payments in the form of dividends (which was influenced by improvement in corporate performance during the reporting period). Services trade balance deficit also widened, partly due to increasing transportation services deficit affected by rising import freight services payment.”
“Trade surplus rose slightly in 2Q21, with the strong exports’ performance (due to stronger demand from main trading partner countries as well as rising international commodity prices) offset by an increase in imports, mainly oil and gas.”
“The capital and financial account (which records trade in assets between Indonesians and foreign counterparts) posted a smaller surplus of USD1.9bn in 2Q21 vs. USD5.5bn surplus in 1Q21, driven by higher deficit in other investment account (2Q21’s -USD7.8bn vs 1Q21’s -USD3.5bn); induced by rising repayment on maturing private foreign loans.”
“Portfolio investments maintained net inflows of USD4.4bn, slightly lower than USD4.9bn in the previous quarter, given the persistence of global financial market uncertainty. On the other hand, direct investment rose to USD5.3bn, attributable to the equity capital instruments in line with the improvement in domestic economic outlook.”
“Overall, higher CAD (which more than offset capital and financial account surplus) led Indonesia to register USD0.4bn of deficit in its 2021’s Balance of Payment (BoP) vis-à-vis USD4.1bn surplus in the previous quarter.”
