Indonesia recorded a trade surplus of USD4.4bn in H115, following a larger dip in imports relative to exports. The slowdown in import volume growth could be an indicator of sluggish growth in the industrial sector. However, as government-backed infrastructure projects enter the construction phase over the coming quarters, imports should start to pick up, and we expect the trade surplus to narro…
Indonesia's current account balance will benefit from its widening trade surplus, which should allow the deficit to narrow to 2.4% and 1.8% of GDP in 2015 and 2016, respectively. However, as the trade surplus has largely been the result of a deeper contraction in imports relative to exports, it reflects poor investor appetite and sluggish industrial activity, which will weigh on economic growth.