Alert signal for trade performance
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Sinyal waspada kinerja dagang
18 April 2023
By: Hendra Wibawa
Even though it is still brilliant until the end of the first quarter of 2023, Indonesia’s trade performance is reckoned to enter a crucial period. The consecutive surplus of the trade balance for 35 months is accompanied by the decline in the realisation amount.
Several parties are worried that, if it continues, it can disturb the national economic fundamentals, especially regarding foreign exchange reserves and rupiah exchange rate.
Moreover, export forecast in the future is still challenging as it is overshadowed by weakening commodity prices and potential recession in main export destination countries, such as the United States of America.
Yesterday on Monday (17/4), Statistics Indonesia (BPS) released the data on the trade surplus in March 2023 that reached US$2.91 billion, which decreased from US$5.48 billion in the previous month.
Based on the month-to-month performance, BPS recorded that Indonesia’s export value in March 2023 reached US$23.5 billion, which decreased by 11.33% year-on-year (YoY).
Exports in the first quarter of 2023 only increased by 1.6% to US$67.2 billion from the realisation last year.
If it is observed further, export performance in the quarter slowed down compared to the growth in January-March 2022 that reached 35.25% YoY. Moreover, export performance in the first three months of this year is the slowest first quarter performance since 2020.
BPS Methodology and Statistics Information Deputy Imam Machdi said that the export growth slowdown was caused by the decrease in oil and gas exports by 4.7% as well as non-oil and gas exports by 11.70% YoY. Exports in the processing industry also decreased by 5.40% YoY to US$47.78 billion.
According to him, exports in three processing industries decreased from the previous year, namely palm oil, textile apparel, and sport shoes. The decrease in exports is accompanied by the decrease in imports throughout January-March 2023 by 3.28% to US$54.95 billion. Indonesia can still enjoy a trade balance surplus that reaches US$16.5 billion in the first quarter of 2023, which increased by 13% YoY.
Indonesia Chamber of Commerce and Industry (Kadin) Maritime, Investment, and Foreign affairs Deputy Chairperson Shinta W. Kamdani regrets the export performance in the first quarter of 2023 that slowed down.
The contribution of exports is crucial to the national economic growth that is currently under heavy pressure.
“We have warned that exports of added value products and manufacturing products will be under pressure from the decrease in demand throughout this year due to the monetary tightening and the high economic crisis risk in main export destination markets, especially the USA and the European Union.”
For several months, she reckoned that the government made importing raw and supporting materials more difficult, so the manufacturing industry that is oriented towards exports is increasingly under pressure.
She hopes that the government will facilitate all efforts to diversify the export destination markets, especially to non-traditional markets to boost export financing and market penetration, and to relax restrictions against importing raw materials, supporting materials, and capital goods to maximise manufacturing performance.
Meanwhile, Centre of Economic and Law Studies (Celios) Director Bhima Yudhistira reckoned that the export growth slowdown in the first quarter of 2023 was a serious threat to Indonesia’s economy.
“Due to the pressure on exports, I worry that the macroeconomy stability indicators, such as rupiah exchange rate, foreign exchange reserves, and jobs will be affected,” Bhima said.
