Current Account Deficit Narrows

The Indonesian current account deficit narrowed to $0.9bn in Q3 from $2.2bn worth 0.2% of GDP after 0.6%, consistent with Bank Indonesia’s forecast of -0.4% to +0.4%. Q2 was the first deficit since the pandemic. The improvement was driven by better exports for iron and steel but other commodities remained weak, such as coal and palm oil, as reflected in the monthly trade data. The improvement was also helped by recovering tourism shrinking the services deficit. The capital & financial account deficit also narrowed sharply. The balance of payments deficit improved in Q3 to $1.5bn from $7.4bn. Both direct and portfolio investment liabilities were lower.