Indonesia trade picture brightens after Ramadan slump

JAKARTA, Indonesia – Indonesia posted a slim trade surplus in July, bouncing back from a deficit the previous month caused by increased imports before the Islamic holy month of Ramadan and the Eid holiday, data showed Monday, September 1.

Meanwhile inflation eased further to 3.99% year-on-year in August from 4.53% in July, continuing a downward trend after a big rise in fuel prices sparked a surge last year.

The trade surplus came in at $125 million, compared to a deficit of around $290 million in June as shops stocked up on expensive imported food and clothes before Islam’s holiest month.

Suryamin, the head of the official statistics agency, Badan Pusat Statistik (BPS), said imports surged in June before the start of Ramadan but actually slowed during the holy month in July.

Eid, or Idul Fitri as it is referred to in Indonesia, falls at the end of Ramadan.

Imports slipped to $14.05 billion in July, down 19.31% from a year earlier.

The trade balance is keenly watched because a large shortfall adds to the current account deficit, which has been a key concern of foreign investors in recent times.

Narrowing the deficit is one of the main economic challenges facing Indonesia’s president-elect Joko Widodo, who will take office in October.

However on a more disappointing note, manufacturing activity in Indonesia contracted in August, according to HSBC’s purchasing managers’ index.

It slipped to 49.5, a surprise reading after months of expansion. A reading above 50 indicates expansion, while below signals contraction. – Rappler.com