The Transaction Balance Deficit Is Estimated To Be Widening In 2025

JAKARTA - Bank Indonesia (BI) estimates that the current account deficit (CAD) will widen in 2025 but is still in the healthy category.

Executive Director of the Communication Department of Bank Indonesia (BI) Ramdan Denny Prakoso revealed that the current account deficit is estimated to be around 0.5 percent to 1.3 percent of gross domestic product (GDP).

"The 2025 NPI is predicted to remain healthy, supported by a continuing capital and financial account surplus and a maintained account deficit in the deficit range of 0.5 percent to 1.3 percent of GDP," he said in his statement, Friday, February 21.

Denny conveyed that the surplus of capital and financial transactions supported by foreign capital inflows was in line with investor positive perceptions of better domestic economic prospects and attractive investment returns.

Meanwhile, the current account deficit in 2024 is deeper, reaching 8.9 billion US dollars or 0.6 percent of GDP compared to 2023 which amounted to 2 billion US dollars or 0.1 percent of GDP.

According to him, this development was influenced by a decrease in the balance sheet of goods trading in line with the weakening demand for major trading partner countries amid strong domestic demand.

"The position of foreign exchange reserves at the end of December 2024 rose to USD 155.7 billion from USD 146.4 billion at the end of December 2023," he said.

Denny conveyed that the position of foreign exchange reserves is equivalent to financing 6.5 months of imports and government foreign debt, and is above the international adequacy standard of around 3 months of imports.

In the future, Denny said that Bank Indonesia will always pay close attention to the dynamics of the global economy that can affect the prospects for NPI and continue to strengthen the response of policy mixes supported by policy synergies with the Government and related authorities, in order to strengthen the resilience of the external sector.