The Transaction Deficit Runs Widely To 3 Billion US Dollars In The Second Quarter Of 2024

Illustration (Photo: Doc Antara)

JAKARTA Bank Indonesia (BI) recorded a current account deficit (CAD) in the second quarter of 2024 reaching 3 billion US dollars or 0.9 percent of Gross Domestic Product (GDP).

This value is slightly higher than the first quarter of 2024 which reached a deficit of US$2.4 billion or 0.7 percent of GDP.

Assistant Governor of the BI Communications Department Erwin Haryono said the widening deficit was in line with the increase in the trade balance surplus in goods, contributed by the declining oil and gas trade balance deficit and a relatively stable non-oil and gas trade balance surplus.

"Non-oil and gas exports grew positively, supported by improvements in commodity prices and demand from major trading partners, while non-oil and gas imports were relatively stable influenced by maintained domestic economic activity," he said in his statement, quoted Friday, August 23.

According to Erwin, the balance of services deficit has increased, influenced by the travel service deficit (travel) in line with the implementation of the 2024 Hajj pilgrimage.

"The primary income balance deficit is also higher influenced by dividend payments and interest/coupons according to the quarterly pattern," he said.

Erwin explained, the performance of capital and financial transactions has improved amid the high uncertainty of global financial markets.

Capital and financial transactions recorded a surplus of 2.7 billion US dollars in the second quarter of 2024, from the previous deficit of 1.6 billion US dollars in the first quarter of 2024.

"This positive performance is mainly supported by foreign capital inflows in portfolio investments amidst the uncertainty of the global financial market which is still high," he said.

Erwin said that direct investment still posted a surplus in line with investor optimism for the economic outlook and a maintained domestic investment climate.

Other investments noted that the decline in the deficit was influenced by a decrease in private investment in several foreign financial instruments, amid an increase in payments to private foreign debt as scheduled.

In the future, Erwin 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 relevant authorities to strengthen the resilience of the external sector.

"NPI 2024 is predicted to be maintained with transactions running in the low deficit range of 0.1 percent to 0.9 percent of GDP," he said.

Erwin said that the balance of capital and financial transactions is predicted to continue to record a surplus, supported by an increase in foreign capital inflows, both in the form of Foreign Investment (PMA) and portfolio investments in line with investor positive perceptions of the national economic prospects and attractive investment returns.

The performance of the Indonesia Payment Balance (NPI) in the second quarter of 2024 showed improvement with a natural deficit of 0.6 billion US dollars, lower than the deficit of 6.0 billion US dollars in the first quarter of 2024.

Erwin said that the improvement was supported by an increase in the performance of capital and financial transactions which recorded a surplus and a maintained deficit in transactions.

"With these developments, the position of foreign exchange reserves at the end of June was recorded to remain high at US$14.2 billion, or equivalent to financing 6.2 months of imports and payment of government foreign debt, and was above the international adequacy standard of about 3 months of imports," he explained.