Indonesia Trade Deficit Likely Widened in January, Inflation Ticks Up
February 27, 2013
Indonesia's trade deficit likely widened in January as higher crude oil prices raised the nation's import bill, while export growth remained tepid due to soft global demand, a Reuters poll showed on Wednesday.
The poll also showed that inflation accelerated in February from a month earlier on rising food prices and higher electricity tariffs.
The January trade deficit likely widened to $210 million from $150 million in December, according to the median forecast in a poll of 13 analysts, as imports grew at a faster pace in January at 7.1 percent year-on-year, from a 5.55 percent drop a month earlier.
"Coal and palm oil prices were stable to slightly higher, [but] crude oil prices increased significantly, possibly leading to a worsening terms of trade," said Jakarta-based economist at Citi, Helmi Arman.
Indonesia's oil purchase bill is relatively big. Total oil imports in 2012, including crude oil, gas and other petroleum products, made up about 15 percent of the country's overall import bill for that year.
The poll's median projection for January exports is down 0.5 percent year-on-year, improving from a 9.78 percent drop in December, coinciding with a recovery in the Chinese economy which has pushed up commodity prices in recent months.
Indonesia, Southeast Asia's largest economy, posted a wider-than-expected current account deficit of 2.7 percent of gross domestic product last year, as surging fuel imports hurt the oil trade balance.
However, strong foreign direct investment and portfolio flows during 2012 has helped the G20 economy to book a balance of payment surplus of $165 million, though this was much smaller than the $11.9 billion surplus in the previous year.
Indonesia's twin deficits have raised concerns among offshore investors, putting more pressure on the already weakened rupiah and making it the worst-performing emerging Asian currency last year.
Food prices continued to creep up in February, mainly led by the impact of heavy rains a month earlier that disrupting supplies, while a hike in electricity tariffs for certain households have also underpinned higher inflation.
The poll's median projection for February inflation is 4.81 percent, faster than the 4.57 percent a month earlier but well within Bank Indonesia's target of 3.5-5.5 percent this year.
Core inflation, which exclude volatile foods and administered prices, is forecast at 4.35 percent, barely changed from the previous month's 4.32 percent.
"Overall food harvest is still anticipated to be good this year," which should help keep check inflation pressures, said Gundy Cahyadi, economist at OCBC in Singapore, but added that a weak rupiah could continue to tug underlying consumer prices up.
Most analysts expect Bank Indonesia to keep its benchmark rate steady at a record low of 5.75 percent at the Mar. 7 meeting, as the central bank remains focused on supporting growth.
The central bank held its benchmark interest rate steady on Feb. 12, as expected, saying economic growth remained resilient and that the current rate was in line with its inflation target for this and next year.
Reuters
The poll also showed that inflation accelerated in February from a month earlier on rising food prices and higher electricity tariffs.
The January trade deficit likely widened to $210 million from $150 million in December, according to the median forecast in a poll of 13 analysts, as imports grew at a faster pace in January at 7.1 percent year-on-year, from a 5.55 percent drop a month earlier.
"Coal and palm oil prices were stable to slightly higher, [but] crude oil prices increased significantly, possibly leading to a worsening terms of trade," said Jakarta-based economist at Citi, Helmi Arman.
Indonesia's oil purchase bill is relatively big. Total oil imports in 2012, including crude oil, gas and other petroleum products, made up about 15 percent of the country's overall import bill for that year.
The poll's median projection for January exports is down 0.5 percent year-on-year, improving from a 9.78 percent drop in December, coinciding with a recovery in the Chinese economy which has pushed up commodity prices in recent months.
Indonesia, Southeast Asia's largest economy, posted a wider-than-expected current account deficit of 2.7 percent of gross domestic product last year, as surging fuel imports hurt the oil trade balance.
However, strong foreign direct investment and portfolio flows during 2012 has helped the G20 economy to book a balance of payment surplus of $165 million, though this was much smaller than the $11.9 billion surplus in the previous year.
Indonesia's twin deficits have raised concerns among offshore investors, putting more pressure on the already weakened rupiah and making it the worst-performing emerging Asian currency last year.
Food prices continued to creep up in February, mainly led by the impact of heavy rains a month earlier that disrupting supplies, while a hike in electricity tariffs for certain households have also underpinned higher inflation.
The poll's median projection for February inflation is 4.81 percent, faster than the 4.57 percent a month earlier but well within Bank Indonesia's target of 3.5-5.5 percent this year.
Core inflation, which exclude volatile foods and administered prices, is forecast at 4.35 percent, barely changed from the previous month's 4.32 percent.
"Overall food harvest is still anticipated to be good this year," which should help keep check inflation pressures, said Gundy Cahyadi, economist at OCBC in Singapore, but added that a weak rupiah could continue to tug underlying consumer prices up.
Most analysts expect Bank Indonesia to keep its benchmark rate steady at a record low of 5.75 percent at the Mar. 7 meeting, as the central bank remains focused on supporting growth.
The central bank held its benchmark interest rate steady on Feb. 12, as expected, saying economic growth remained resilient and that the current rate was in line with its inflation target for this and next year.
Reuters
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