​Another spike in trade

INDONESIA - Report 29 Apr 2022 by Cyrillus Harinowo

The Indonesian economy has been blessed by the spike in commodity prices. The spike in commodity prices has boosted the export value of various commodities, especially coal, CPO and iron and steel. Export performance in Indonesia broke a new record, achieving $26.5 billion in March 2022. At the same time, total imports also rose in March. In the Indonesian case, the month of Ramadan and the festival Eid, which this year fall in the months of April and early May, drove the import of raw materials to help increase the production necessary to meet the spike in demand.

Since the spike in exports was fortunately greater than the spike in imports, the Indonesian trade balance for the month of March 2022 posted a surplus of $4,529.2 million. In the past, rising imports prior to the months of Ramadan usually drove the trade balance into a deficit. Therefore, it may be concluded that the structure of the Indonesian economy has become stronger, especially because of the Indonesian policy of down-streaming commodities. The Indonesian economy has been especially strengthened by the rise of nickel-based industries, especially steel and stainless steel, as well as the development of EV battery materials.

As mentioned above, the Central Board of Statistics reported that the trade balance in March 2022 resulted in a large surplus, with exports at $26,496 million and imports at $21,966.8 million. The trade surplus for March of $4,529.2 million surpassed the surplus reached in February 2022. Cumulative exports for Q1 2022 reached $66,142.6 million, a record for Indonesian exports for the first quarter of a year. Cumulative imports for the same period reached $56,816.4 million, for a cumulative surplus in Q1 2022 of $9,326.2 million.

The Central Board of Statistics also reported the Consumer Price Index for March, which registered inflation of 0.66%. However, this rate of inflation can be considered low because typically the month prior to the month of Ramadan (this year it was March) produces relatively higher inflation. With that monthly inflation, year-over-year inflation reached 2.64%, a level at the lower part of the target inflation corridor of the Central Bank. Given that level of year-over-year inflation, Bank Indonesia decided to keep the benchmark interest rate constant at 3.50% at its Monetary Policy Meeting held on April 19, 2022.

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