Trade Balance Surplus In May 2024 Estimated To Drop To 2.1 Billion US Dollars

JAKARTA - Bank Permata economist Josua Pardede estimates that the trade surplus trend will continue in May 2024 with an estimated surplus of 2.13 billion US dollars, or a decrease from the April 2024 surplus of 3.56 billion US dollars.

"The decline in this surplus is mainly due to the return of trading activities after the Eid celebration, with a relatively solid domestic economic background," he said in a statement, Wednesday, June 19.

In addition, Josua estimates that export growth on an annual basis will be 1.55 percent (yoy) in May 2024. Meanwhile, monthly exports are estimated to increase by 12.38 percent (mom) in line with the normalization of economic activity after the Eid holiday.

Josua said the CPO price increased monthly in May 2024, driven by an increase in the price of substitute goods such as soybean oil, amid a global decline in vegetable oil supply.

"Nevertheless, the increase in monthly export performance is limited by data from China which indicates a contraction in imports from Indonesia," he explained.

Josua said imports are expected to decline on an annual basis, mainly due to the high base effect from the previous year.

"We estimate that the import rate will decrease by 6.40 percent (yoy) in May 2024, mostly due to the high base effect from May 2023 when imports soar," he said.

On a monthly basis, Josua said imports showed higher growth compared to exports, with an expectations of acceleration of 24.05 percent (mom).

Meanwhile, this increase was mainly due to the end of the Eid al-Fitr season and double-digit monthly growth reported on Chinese exports to Indonesia.

Josua projects that the current account deficit will be under control in 2024, with a moderate widening of 0.14 percent from GDP in 2023 to 0.94 percent from GDP, still lower than the 2012 - 2019 period, with an average of 2.50 percent from GDP.

"This prospect is influenced by several factors, including gradual normalization of commodity prices, relatively resilient domestic demand, and the potential impact of increasing global uncertainty on global demand," he said.

Josua said these factors are expected to narrow the trade surplus and thus affect the surplus of goods in the running account balance.