Monday, January 28, 2008

Indonesia December trade surplus expected to widen as import growth slows

JAKARTA (Thomson Financial) - Indonesia s trade surplus is expected to widen in December from November as exports bounce back while imports slow down, according to economists polled by Thomson Financial.
The Central Bureau of Statistics will release the trade data next Friday.
Five out of six economists polled by Thomson Financial expect the trade surplus to widen, with just one expecting it to narrow.
The economists expect Indonesian exports to come in at between 9.3 billion and 10.7 billion US dollars, with three economists expecting exports to be higher than in the previous month.
Two economists expect exports to shrink and one economist expects them to be unchanged.
Economists expect imports to come in a range of 6.1-7.85 billion dollars.
In November, Indonesian exports fell 4.3 percent month-on-month to 9.81 billion dollars, after hitting an all-time high of 10.25 billion dollars in October. Imports rose 20.5 percent to 7.54 billion dollars, resulting in a trade surplus of 2.27 billion dollars, compared to 3.99 billion dollars in October.
Citigroup economist Anton Gunawan said he expect exports to rise above 10 billion dollars, while imports fall slightly, causing the trade surplus to widen from its November level.
Gunawan said exports and imports of oil and gas would probably not change much, but exports of non-oil and gas were likely higher.
"We do not expect the Indonesian garment and footwear exports to main trading partners, especially to the US, to come down due to the rising risk of recession in the US," Gunawan said.
"Prices of several key primary commodities still show an increasing trend, but the increase is not as big as before," Gunawan said. Prices of rubber rose by 8.2 percent in December from November and prices of vegetable (palm) oil rose 6.23 percent. Prices of Indonesian oil rose a modest 0.8 percent.
"Exports were holding up pretty well. It was just a continuation from recent trends," said David Cohen, economist at Singapore-based Action Economics.
"Exports to the US from a lot of countries eased somewhat, including exports from Indonesia, but not in a dramatic fashion," Cohen said.
Cohen expects Indonesian exports rose to 10.5 billion US dollars in December, while imports remained little changed at 7.5 billion dollars, resulting in a trade surplus of 3.0 billion US dollars.
Mega Capital economist Felix Sindhunata, however, expects the trade surplus to narrow to 1.96 billion in December from 2.27 billion dollars in November. Sindhunata is forecasting that imports rose to 7.85 billion dollars, while exports remained unchanged from the previous month at 9.81 billion dollars.
Bank Internasional Indonesia (BII) economist Juniman expects the December trade surplus to widen from the previous month, as imports fell faster than exports.
Juniman expects exports at 9.78 billion dollars and imports at 6.99 billion dollars.
"Exports edged down in December compared to November partly due to declining demand from some of Indonesia s trading partners, in particular the US," Juniman said.
"The slowdown of the US economy began to have an impact on Indonesia s exports in December," Juniman said. To offset lower demand from the US, the government must diversify its export markets, he said.
Gunawan disagreed, forecasting growth in imports for December.
"We expect the year-on-year import growth to pick up rather significantly in December, mainly due to the base effect and still high fuel prices," Gunawan said.
"Rising economic activities and real income led to a jump in both imports of raw materials and consumption goods," Gunawan said.
Growth of capital goods imports is expected to be relatively modest, especially due to the government s plan to prohibit the import of used heavy equipment. That may slow the growth of capital goods imports in the future, Gunawan said.
As for all of 2007, BII s Juniman expects Indonesian exports to grow by 12.1 percent to 112.84 billion dollars and imports to rise 22.1 percent to 74.56 billion dollars.
Juniman expects Indonesian exports to grow by 9.9 percent this year to 124.4 billion dollars, while imports grow at a slower 16 percent pace to 86.49 billion dollars.
The following are the economists forecasts for trade surplus, exports and imports in November:
Mega Capital - 1.96 billion dollars; 9.81 billion dollars; 7.85 billion dollars
Citigroup - 2.71 billion dollars; 10.06 billion dollars; 7.35 billion dollars
BII - 2.79 billion dollars; 9.78 billion dollars; 6.99 billion dollars
Action Economics - 3.0 billion dollars; 10.5 billion dollars; 7.5 billion dollars
Standard Chartered - 3.2 billion dollars; 9.3 billion dollars; 6.1 billion dollars
ING - 3.8 billion dollars; 10.7 billion dollars; 6.9 billion dollars
(1 US dollar = 9,343 rupiah)
roffie.kurniawan@thomson.com
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