According to media reports and Bloomberg article published on October 17, 2022, Indonesia’s outperforming exports, the economy’s growth engine in the last few quarters, flashed signs of weakness as global commodity prices eased.
The resource-rich nation earned US$24.8 billion from exports last month, down 11% from August. While shipments still rose 20% from a year ago, it was the smallest increase in 20 months and fell short of the 29% expected in a Bloomberg survey of economists.
"Export value declined in September as exports of leading commodities such as iron and steel, palm oil and coal decreased, due to either slower demand and lower prices in global markets,” Setianto, deputy for distribution and services at the Indonesia statistics agency, said in a briefing on Monday.
Indonesia has charted above-5% growth in the last three quarters as surging exports and domestic consumption buoyed an economic rebound. That recovery is set to be tested as trade falters and households bear the brunt of higher fuel prices.
Rupiah Support
The country still mustered a healthy trade surplus of $4.99 billion, extending its streak to 29 straight months and beating economist estimates for $4.85 billion. Imports grew 22% year-on-year to $19.8 billion in September, less than the 33% expected by analysts.
The rupiah declined 0.5% to 15,493 per dollar after the trade data was released, reaching the weakest level since April 2020.
While the persistent trade surplus lends fundamental support for the currency, it may not be enough to offset capital outflows triggered by the Federal Reserve’s aggressive rate hikes, said Wisnu Wardana, an economist at Bank Danamon Indonesia.
"We believe that monetary policy makers need to pick up the pace of tightening in order to seize the opportunity from favorable rupiah fundamentals,” he said, adding that Bank Indonesia may deliver another 50-basis point hike in this week’s meeting. - Bloomberg
