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ECONOMIC UPDATE - Externaltrade review - Surplus closes the year



Highest surplus since 2011

Statistics Indonesia recorded trade surplus at USD2.1 bn in Dec-20. The surplus is lower than our and consensus estimates at USD2.89 bn and USD2.58 bn, respectively. The surplus took the overall 2020 trade surplus total to USD21.6 bn or the highest surplus since the commodity boom in 2011. Besides, Dec-20 figure is special as it recorded the highest export growth since Oct-19 and successfully maintained its eighth monthly trade surplus in a row. The export increased by 8.39% MoM (14.6% YoY) or recorded USD16.5 bn of total export. Import increased as well by 14% MoM (-0.47% YoY) resulting USD14.4 bn of total import. As we predicted, the global economic recovery, higher global public mobility index as well as worldwide positive sentiment from the vaccine led to the better trade performance in Dec-20 and we see the good news will persist in Jan-21 performance. 


Price hike on major commodities

Many important commodities show significant higher price such as ICP, palm oil and coal where it increased by 17.5% MoM, 6.62% MoM and 28.9% MoM respectively. The price hike on commodity played a significant role to boost the export performance. On the other hand, gold slipped down by 0.42% MoM as the global risk subsides. Based on its sector, all of sector grew positively (OG, manufacture and mining) in monthly basis except agriculture. From non-OG sector, the biggest contributor came from Animal/Vegetable Fats and Oil (HS 15) where it grew by 11.2% MoM to USD2.62 bn. From the top export commodities, the highest growth came from Apparel (HS 61) which grew by 33.7% MoM to USD320.9 mn while Ships (HS 89) contracted the most by 74.7% MoM to USD13.8 bn.


Expansion of manufacturing sector

The higher import was triggered by the better domestic manufacturer performance. The IHS Markit Indonesia Manufacturing Purchasing Managers’ Index (PMI) rose from 50.6 in Nov-20 to 51.3 in Dec-20. The index signifies the economic recovery, supported by the loosening of PSBB in mid-October. All of imported goods based on its usage increased in monthly basis; consumption goods (31.9%), intermediary goods (14.2%) and capital goods (3.89%). Based on the goods classification, Machine and Mechanical Equipment (HS 84) was the highest contributor of import where it increased by 12.5% MoM to USD2.16 bn as it contributed 17.1% of total import. From the top import commodities, the highest growth came from Mineral Fuels (HS 21) which grew by 105.4% MoM to USD198.6 mn while Precious Metals (HS 71) contracted the most by 39.7% MoM to USD223.5 bn.


Trade surplus to support IDR in near term, BI to hold BI-7DRRR in Jan-21

Trade performance showed peculiar pattern for export and import figure in Dec-20 where both of them increased while normally both of them used to be lower in December. The high trade surplus in Dec-20, low inflation at 1.63% YoY in the same month and other indicators provide room for BI to trim policy rates further. Although the wide room for rate cut remains, we see that BI will do the wait and see approach in the beginning of 2021. Thus, we believe BI will hold its rate at 3.75% in Jan 20th - 21st BoG Meeting. We also believe that IDR will be supported in the near term as we might see a couple more months of trade surpluses.