Tim Riset Ekonomi dan Industri BCA

  

Indonesia’s trade balance recorded a USD 1.61 Bn deficit in May-26 (vs USD 89 Mn surplus in Apr-26), marking the end of a 72-month long trade surplus streak. This reversal was driven by the contraction in exports (-8.30% MoM, -5.73% YoY) that significantly outpaced the decline in imports (-1.59% MoM, +22.16% YoY).

  

The export decline was partly driven by CPO, which saw a 26.85% MoM decrease. This is caused by several factors like weather impacts, increase in fertilizer prices (usage is reduced, which affects productivity) and a slowdown in demand from major countries like India, China, and the US. Other commodities that also saw declines include iron and steel (-4.54% MoM) and mechanical machinery (-24.85% MoM), while coal exports performed positively (+10.49% MoM).

  

On the import side, the oil & gas category remains substantial despite a slight normalization (-1.82% MoM), maintaining a large oil and gas balance deficit. Other factors contributing to the monthlydecline in imports include fewer working days, currency depreciation (a disincentive to increase imports), and the seasonality of precious metal demand (-45.87% MoM) after its peak around the Eid al-Fitr period (March-April).

  

On an annual basis, import growth accelerated in capital goods (12.7% YoY) and raw materials (25.2% YoY), whereas consumer goods slowed down (22.0% YoY) compared to the growth in April. This is in line with the surging credit growth that month, particularly driven by productive credit.

  

Looking ahead, exports face several headwinds. Firstly, with a more hawkish Fed, and similarly other central banks, global demand could decelerate. Secondly, the mandatory B50 biodiesel programmay impact the allocation of CPO for export (in addition to ongoing weather factors). Thirdly, the certainty of policies regarding production (and export) restrictions for commodities like coal and nickel. Fourthly, the “PT DSI effect” may come into play for the Jun-26 trade reading, although for the medium term there are still too many uncertainties on when or how it will actually be implemented. Imports, on the other hand, could continue, with robust government spending more or less offsetting the impact of currency depreciation on demand. This combination of factors creates a feedback loop leading back to a weakening Rupiah, which we predict will be addressed by an additional 50 bps increase in BI’s policy rate this year.

 

Versi lengkap report ini (dan report sebelumnya) dapat diakses lewat link berikut: https://s.id/BCA_REI