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[News] First Trade Deficit In Q1 For Indonesia
Posted at: 15 May 2019

Indonesia is seen recording its first trade deficit in three months in April, with exports and imports predicted to continue their plunge, a Reuters survey showed on Monday.

Southeast Asia's largest economy had a trade surplus for two months in a row up to March, helping it narrow its current account deficit in the first quarter to the smallest in a year.

However, analysts have expressed their doubts that this was a sustainable trend, especially because imports usually pick up before the fasting month of Ramadan in the Muslim-majority country. Ramadan began in early May this year.

For April, 10 analysts in the poll had a median forecast of $500 million trade deficit, compared with a revised surplus of $670.81 million in March.

Although imports prior to Ramadan are typically higher than normal, on a yearly basis they were seen falling by 12.10% due to base effect of high imports in April 2018. Imports dropped 7% on year in March.

Meanwhile, exports were seen contracting for a sixth straight month in April, by 7.15% from a year earlier, though the pace was less sharp compared with 9.40% in March.

Going forward, the current account deficit "is likely to widen in 2Q19 onwards as infrastructure development would start ramping of after the election", DBS economist Masyita Crystallin wrote in a research note, adding that rising oil prices and re-escalation of U.S.-China trade war may also worsen the condition.

(source: Investing)