Exports in September 2007 dropped to US$ 9.52 bn, down by 0.91% from US$ 9.61 bn in August. Imports, meanwhile, fell to US$ 6.76 bn, or down by 1.37% from US$ 6.85 bn. As a result, the trade balance in September stayed the same at US$ 2.76 bn.
On a yearly basis, exports climbed by 7.64% y-o-y in September 2007. Imports also rose: up by a hefty 19.63% y-o-y. Cumulatively, in the first nine months of 2007, exports grew by 12.88% while imports grew by 17.43% from their levels in the corresponding period of 2006. As a result, the trade balance widened to US$29.35 bn from US$27.85 bn in the first nine months of 2006.
Although exports did indeed decline in September 2007, the figure is still relatively high by historical standards. This suggests global demand is still strong. At the same time, the imports figure in September 2007 – although down – is still relatively high by historical standards. This indicates that domestic economic activity remains firm.
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. At the same time, domestic demand is expected to remain firm. As such, we expect exports and imports to be higher in October than in September 2007.
The Leading Economic Index (LEI), which predicts an economy’s direction over the next 6-12 months, also suggests that economic activities in Indonesia’s main trading partners are likely to remain firm over the near future. The US Leading Economic Index (LEI) rose to 137.9 in September 2007 from 137.5 in August 2007. Singapore’s LEI, meanwhile, rose to 122.0 in the second quarter of 2007 from 118.0 in the first quarter of the year. And Japan’s LEI fell slightly to 100.4 in August 2007 from 102.5 in the previous month. Yet despite the decline, the LEI in Japan is still at a relatively high level it should be noted.
The latest consumer confidence data shows that Japan’s CCI fell to 44.1 in August from 44.6 in July 2007. Meanwhile, the US Consumer Confidence Index (CCI) dipped to 99.5 in September from 105.6 in August 2007. Despite the declines, however, the levels of the CCI in both Japan and the US are still at relatively high levels. As such, we believe that the US and Japanese consumers are likely to continue spending over the next several months, fueling economic growth in their respective countries.
Companies in Indonesia’s main trading partners have also pushed up production activities. And the trend is very likely to continue in the near term, as suggested by the Industrial Production Index (IP) in those countries. The IP in the US rose slightly to 114.4 in September from 114.3 in the previous month. Meanwhile, the IP in Japan fell slightly to 110.3 in September from 111.9 in August and the IP in Singapore fell to 142.4 in September from 152.2 in the previous month. Despites the falls, however, the levels of the IP in both Japan and Singapore are still at relatively high levels. In addition, the IP for those countries is still showing an upward trend. As such, we believe that the industrial output in Indonesia’s main trading partners in the coming months will remain high.
All in all, we expect exports to reach US$ 9.59 bn in October 2007, up from US$ 9.52 bn in September 2007. Meanwhile, imports are expected to increase to US$ 6.78 bn in October 2007 from US$ 6.76 bn in September 2007. Consequently, Indonesia’s trade balance is expected to widen to US$ 2.80 bn in October 2007 from US$ 2.76 bn in the previous month. TradeOutlookNov07