BI Is Delighted That Indonesia's Trade Balance Surplus: External Resilience Is Maintained

JAKARTA – Bank Indonesia (BI) reported that Indonesia's trade balance (BOP) at the end of the second quarter of 2022 was in a surplus of USD 2.4 billion.

Head of the BI Communications Department Erwin Haryono said this position was a reversal after previously in the first quarter of 2022 there was a deficit of USD 1.8 billion.

"The increase in BOP performance was supported by an increasing current account surplus and an improvement in the capital and financial account deficit," he said in a written statement on Friday, August 19.

According to Erwin, the positive results had an impact on foreign exchange reserves at the end of June 2022 which reached 136.4 billion US dollars.

He said this amount was equivalent to 6.4 months of imports and servicing the government's foreign debt, and was above international adequacy standards.

"The current account surplus increased significantly in the second quarter of 2022, mainly supported by the improving performance of non-oil and gas exports," he said.

Erwin added that the current account recorded a surplus of 3.9 billion US dollars (1.1 percent of GDP), a significant increase from the previous quarter's surplus of 400 million US dollars (0.1 percent of GDP).

The current account performance was mainly supported by an increase in the non-oil and gas trade balance surplus in line with persistently high global commodity prices.

On the other hand, the oil and gas trade balance deficit increased due to the increase in imports in response to increased demand in line with the increase in people's mobility, as well as high world oil prices.

Furthermore, the primary income and services account deficits also increased in line with the acceleration of domestic economic activity and the payment of investment returns during the reporting period.

"The performance of capital and financial transactions in the second quarter of 2022 was maintained amidst high global financial market uncertainty," he said.

Then, the capital and financial account in the second quarter of 2022 recorded a deficit of USD 1.1 billion (0.3 percent of GDP) or improved compared to a deficit of US$2.1 billion (0.7 percent of GDP) in the first quarter of 2022.

The performance of the capital and financial account was supported by a net inflow (surplus) of direct investment of USD 3.1 billion, continuing the surplus in the previous quarter, reflecting investor optimism regarding the prospects for economic recovery and a well-maintained domestic investment climate.

In addition, portfolio investment performance also showed limited improvement by recording a lower deficit of USD 400 million, amidst continued high uncertainty in global financial markets.

On the other hand, other investment transactions recorded an increase in the deficit mainly due to an increase in the need for payment of obligations that matured according to a quarterly pattern. and continue to coordinate policies with the government and relevant authorities to strengthen the resilience of the external sector,” concluded Erwin.