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ECONOMIC UPDATE - External trade review - One full year of surplus



Twelve straight months of surplus

Statistics Indonesia reported Indonesia posted trade surplus of USD2.19 bn in Apr-21. The surplus doubled both our and consensus estimates of USD1.19 bn and USD1.20 bn, respectively. Just like last month, the increase of export and import were significant on yearly basis. The export increased by 0.69% MoM (51.9% YoY) or recorded USD18.5 bn of total export. On the other hand, import decreased by 2.98% MoM (+29.9% YoY) resulting USD16.3 bn of total import. The robust export was due to the low base effect, higher commodity prices and rebounding global demand. Meanwhile, the surge of import happened due to the growing domestic manufacture, supported by the increase on import of foods related to Eid celebration in May-21. 


Commodity prices effect

Lot of important commodities showed higher prices on monthly and yearly basis such as palm oil, copper and rubber where they increased by 76.5% YoY, 84.4% YoY and 61.4% YoY, respectively. The price hike on these commodities played a significant role to boost the export performance. Based on its sector, all of sectors (OG, agriculture, manufacture and mining) soared in monthly and yearly basis except the agriculture sector where it slipped by 14.6% MoM (+18.9% YoY). From the selected non-OG sector, the biggest contributor (14.8% of total export) came from Animal/Vegetable Fats and Oil (HS 15) where it decreased by 13.8% MoM to USD2.49 bn. On top export commodities, the highest growth came from Precious Metal (HS 26) at 39.5% MoM to USD177 mn.


Boost from manufacturing activity

The IHS Markit Indonesia Manufacturing Purchasing Managers’ Index (PMI) posted the all-time high figure again at 54.6 in Apr-21 from 53.2 in Mar-21. The index moved above the 50-threshold, signifying the economic recovery. The solid figure was supported by the sharp accelerations in rates of growth in output and new order due to the stronger global client demand. Besides, food imports related to Eid celebration in May-21 also boosted the import. All of imported goods based on the usage increased in monthly and yearly basis: consumption goods (34.1% YoY), intermediary goods (33.2% YoY) and capital goods (11.6% YoY). Based on the goods classification, Machine and Mechanical Equipment (HS 84) was the highest contributor (14.6% of total import) where it increased by 8.61% MoM to USD2.11 bn. From the selected import commodities, the highest growth came from Vegetables (HS 07) which grew by 177.3% MoM to USD193.4 mn due to the preparation for Eid Celebration. 


Expecting unchanged policy rate in May-21

The strong performance of trade in Apr-21 was actually obvious especially because of the low base effect and the significant hike of commodity prices. Based on Baltic Dry index (BDI), global shipments were robust due to the improving global demand from big economies that have been already recovering faster from the pandemic. However, we see the trade performance in May-21 will be slightly lower than Apr-21 figure due to some lockdowns that are re-imposed on several countries due to the resurgence of Covid-19. Despite of the robust trade performance, we see that Bank Indonesia (BI) will hold the BI-7DRRR at 3.5% in the next BoG Meeting in May 24th – 25th 2021 in order to stay competitive yet accommodative towards the market.