March Trade Surplus Widens But Q1 Narrower

Indonesia’s March trade surplus widened more than expected due to stronger exports and weaker imports, but both still contracted on the year. The surplus rose to $4.47bn from $0.83bn in February with exports declining 4.2% y/y up from -9.6% but imports down 12.8% y/y after rising 15.8%.

• Given recent rupiah weakness, Bank Indonesia is likely to be reassured by the largest surplus since February last year, assuming it is sustained, but Q1 was almost $5bn lower than Q1 last year. BI meets on April 24 and is expected to leave rates at 6% but around a quarter of analysts are forecasting a 25bp hike. USDIDR is up 2.3% this month and is currently trading around 16215, down from Friday’s close of 16255.
• Non-oil & gas exports improved to -4.2% y/y from -10.3% while gas fell -8.7% but improved from -19%. Coal and palm oil exports rose on the month. Q1 exports though were down 7.3% y/y.
• Non-oil & gas imports fell 16.7% y/y after rising 14.4%, which was driven by a sharp 19.5% y/y drop in goods from China. Consumer goods imports rose 5% y/y signalling continued robust private consumption, but capital goods fell 21.7% and raw materials -12.6% y/y. Q1 GDP is released on May 6.