ECONOMIC UPDATE - External trade review - Trade surplus narrows on mixed export-import trends

Trade surplus slightly narrows as NOG surplus declines

Indonesia’s trade surplus slightly narrowed to USD4.10 bn in Jun-25 from USD4.30 bn in May-25, but still exceeded both our forecast of USD3.63 bn and the consensus estimate of USD3.44 bn. This marks the 62^nd consecutive monthly trade surplus since May-20 and the third instance this year where the monthly surplus exceeded USD4.0 bn. The modest decrease was primarily driven by a lower non-oil and gas (NOG) surplus, which declined to USD5.21 bn from USD5.83 bn in May-25, while the oil and gas (OG) trade deficit narrowed slightly to –USD1.11 bn from –USD1.53 bn. By trading partner, the United States remained the largest contributor to Indonesia’s trade surplus, posting USD1.63 bn, while China continued to record the largest trade deficit at –USD1.82 bn in Jun-25. Looking ahead, several downside risks may weigh on Indonesia’s export performance and limit further trade surpluses, including the US reciprocal tariff and its requirements, China’s sluggish economic recovery, and softening global commodity prices. Given these challenges, we maintain our projection for Indonesia’s current account deficit to remain at –1.0% of GDP in 2025.

 

June exports mixed amid lower iron prices but stronger US demand

Indonesia’s total exports reached USD23.43 bn in Jun-25 (-4.78% MoM but +11.29% YoY), surpassing both our forecast of +10.50% YoY and the consensus estimate of +10.20% YoY. The monthly decline was mainly driven by a drop in iron ore prices, which fell -4.78% MoM to USD92.33/dmtu, leading to a sharp decline in exports of iron and steel products (HS 72) by -22.23% MoM to USD2.18 bn. On an annual basis, however, the increase in exports was supported by exporters’ anticipatory response to evolving US trade policy under Trump. Notably, exports to the US rose sharply by +33.49% YoY to USD2.67 bn, marking the largest increase among major trading partners. Meanwhile, NOG exports stood at USD22.32 bn, down -5.01% MoM but up +12.61% YoY, while OG exports fell by -0.09% MoM and -9.85% YoY to USD1.11 bn. Looking ahead, we expect monthly export growth to rebound in July, supported by more working days and rising prices of key export commodities such as CPO (+5.34% MoM to MYR4,155/ton) and coal (+4.82% MoM to USD115.2/ton).

 

Weaker PMI weigh on imports

Indonesia’s total imports reached USD19.33 bn in Jun-25, down -4.82% MoM but up +4.28% YoY, missing both our forecast of +5.10% YoY and the consensus estimate of +6.33% YoY. On a monthly basis, imports of consumption goods, raw materials, and capital goods declined by -1.49% MoM, -4.94% MoM, and -5.81% MoM respectively, amounting to USD1.79 bn, USD13.35 bn, and USD4.18 bn. The deceleration reflects weakening purchasing power and a contraction in manufacturing activity, in line with the decline in Indonesia’s Manufacturing PMI to 46.9 in June—marking the third consecutive month of contraction. On a yearly basis, however, capital goods imports grew by +37.89% YoY, marking their highest growth in the past two years, supported by ongoing government infrastructure projects such as the new capital city (IKN) development and downstream industrial initiatives. OG imports fell sharply by -15.96% MoM and -32.1% YoY to USD2.22 bn, in line with an 11.04% YoY decline in WTI oil prices to USD69.3/bbl. Meanwhile, NOG imports declined by -3.15% MoM but rose +12.07% YoY to USD17.11 bn. Looking ahead, we expect import growth to remain elevated, supported by import deregulation and higher U.S. imports as part of ongoing reciprocal tariff negotiations.