• Indonesia posted a narrow balance of payments (BoP) deficit of USD 0.5 Bn in Q2-2026, a significant improvement from the USD 9.1 Bn deficit recorded in the previous quarter. While the headline figure appears benign, it masks two extreme underlying components. The current account (CA) reached an all-time low, with a deficit of USD 12.5 Bn (-3.3% of GDP), while the financial account (FA) simultaneously recorded an unusually high surplus of USD 12.0 Bn
• The CA deficit was widely anticipated by analysts, as Q2’s trade balance reverts to a deficit. Seasonal dividend payments in Q2 tend to widen the deficit, though the bulk of the deterioration stems from the goods trade balance. While blaming the US-Iran war for driving oil prices higher, which in turn weighed on the goods and services balance, holds merit, it is only part of the story. A closer look at the figures reveals that the non-oil and gas surplus has continued to decline on the back of rising imports, a natural consequence of stronger loan growth.
• Conveniently, the FA surplus offset the CA deficit, albeit by a slim margin. And more conveniently, even though the private sector portfolio and other investment balance posted a USD 11.5 Bn deficit, the public sector balance recorded a substantial USD 20.4 Bn surplus. The private sector deficit is understandable given the heavy capital outflows and private investors placing their savings abroad, which have pressured the Rupiah throughout Q2. On the other hand, the USD 13.0 Bn public sector surplus was driven by SRBI issuance and global bond placements, while the remaining USD 7.4 Bn stemmed from liabilities in other investments, particularly within the currency and deposits subcategory.
• Overall, the FA surplus was largely a product of rising liabilities, or in other words, increased borrowings. On one hand, this underscores continued foreign investor appetite for domestic assets. On the other hand, it carries forward-looking risks, as it is premised on the assumption that future conditions will be more favorable than today.
• Going forward, the CA is expected to remain in deficit, though at a more moderate level than the current quarter, as non-oil and gas imports are likely to continue rising if loan growth remains elevated. The question is whether the same financing strategy can continue to support the FA. Adding to the challenge, it is not a favorable environment to take on more debt given rising global long-term yields – the 30-year UST yield has breached 5%, JGB yields have breached 4%, and German Bunds have crossed 3%. Therefore, we continue to expect Bank Indonesia to keep rates high to attract more capital inflows.

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