The Transaction Deficit Is Predicted To Reach 0.76 Percent Of GDP In 2024

JAKARTA - Bank Permata economist Josua Pardede projects moderate widening of the current account deficit from 0.14 percent of Gross Domestic Product (GDP) in 2023 to 0.76 percent of GDP in 2024.

"This estimate is slightly better than our previous estimate of 0.94 percent of GDP, reflecting a trade surplus higher than expected in the second quarter of 2024," he explained in his statement, Friday, August 16.

However, Josua estimates that the current account balance will show a deficit of 0.83 percent of GDP in the second quarter of 2024, widening from 0.64 percent of GDP in the first quarter of 2024.

According to Josua, this increase was largely due to seasonal expansion of the primary revenue deficit in the second quarter, driven by increased asset returns to non-residents, although trade surplus improved.

To note, Bank Indonesia will announce the performance of the Indonesia Payment Balance (NPI), including the current account balance, for the second quarter of 2024 on August 22, 2024.

Josua explained that the increase in the deficit anticipated in the second half of 2024 was caused by several factors, including gradual normalization of commodity prices and the risk of weakening global demand.

However, Josua said that the downstream policy is expected to reduce the dependence of current transactions on commodity prices, thereby limiting the deficit.

"In addition, the potential reduction in global policy interest rates this year can help reduce commodity prices to a certain extent," he said.