Airlangga: Effects Of Gas And Brake Economic Policy, Making Indonesia's Trade Surplus Increase

The Indonesian Coordinating Minister for the Economy Airlangga Hartarto said the gas and brake economic policies caused the trade surplus. (photo: instagram)

JAKARTA – Indonesia's trade report shows that exports and imports have recorded double-digit increases in August 2021. This is due to economic activity which has begun to recover from low levels of trade in 2020.

However, the surge in exports pushed the trade surplus to a record high of US$4.7 billion (Rp67tn). This figure has soared far beyond the government's expectations, which previously only targeted a surplus of US$2.31 billion (Rp32.9 trillion).

Indonesia's exports rose 64.1%, compared to the forecast of 36.1%. These exports were driven by outbound shipments from the oil and gas sector (+77.9%), mining (+162.9%) and manufacturing (+52.6%). Meanwhile, imports were also higher than expected by posting an increase of 55.26%, whereas the previous estimate was only forecast of 45%. This figure also reflects the improvement in domestic activity compared to last year.

This sizeable trade surplus is likely to provide support to the rupiah exchange rate and may be enough to push the entire current account balance back into a surplus in August.

The strong performance for the export sector was also driven by rising commodity prices, which helped exports hit record highs so far. If commodity prices remain high in the coming months, exports could maintain a solid expansion to help keep the trade surplus at this high level.

The Coordinating Minister for the Economy of the Republic of Indonesia as well as the Chair of the Covid-19 Handling and National Economic Recovery (KPCPEN) Airlangga Hartarto, stated that a number of improvements and improvements to the Indonesian economy were triggered by economic policies that became the balance of gas and brakes.

"In addition, the policy of Downstreaming CPO and the production of stainless steel, which has been Indonesia's advantage so far," said Airlangga, in a release to the media.

Bank Indonesia has also recently hinted that interest rate policy will be on hold for at least this year's balance and the Rupiah may need to get support from the export sector for now.