Indonesia Trade Outlook October 2007

31 10 2007

Bright Prospects Remain

Exports in August 2007 dropped to US$ 9.61 bn, down by 2.11% from US$ 9.81 bn in July 2007. Imports, in contrast, rose to US$ 6.85 bn, or up by 9.38% from US$ 6.26 bn in July. As a result, the trade balance in August narrowed to US$ 2.76 bn from US$ 3.55 bn in July.

On a yearly basis, exports climbed by 7.80% y-o-y in August 2007. Imports also rose: up by a hefty 20.07% y-o-y. Cumulatively, in the first eight months of 2007, exports grew by 13.35% while imports grew by 16.87% from their levels in the corresponding period of 2006. As a result, the trade balance widened to US$26.53 bn from US$24.65 bn in the first eight months of 2006.

Although exports did indeed decline in August 2007, the figure is still relatively high by historical standards. This suggests global demand is still strong. Meanwhile, the increase in imports in August 2007 indicates that domestic economic activity remains strong.

Looking ahead, we believe that demand for Indonesian products will remain firm in the near term given that several economic indicators in Indonesia’s main trading partners are likely to remain positive. Thus, exports are expected to increase in September 2007. At the same time, domestic demand is expected to remain firm. As such, we expect imports to be higher in September than in August 2007.

All in all, we expect exports to reach US$ 10.56 bn in September 2007, or up from US$ 9.61 bn in August 2007. Meanwhile, imports are expected to increase to US$ 7.09 bn in September 2007 from US$ 6.85 bn in August 2007. Consequently, Indonesia’s trade balance is expected to widen to US$ 3.47 bn in September 2007 from US$ 2.76 bn in August. IndonesiaTradeOutlook-Oct07



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