Exports keep improving
As predicted, Indonesia saw a small retreat in its economic growth in Q3 2021. The economy reported an increase of 3.51% from the same period in the previous year. Compared to the previous quarter, the Indonesian economy grew by 1.55%. This is the second positive growth rate for the economy since the start of the Covid-19 pandemic in March 2020.
The improvement of the economy was accompanied by a large surplus in the current account for that quarter. While in Q2 2021, the Indonesian current account reported a deficit of $1,965 million or 0.68% of GDP, in Q3 2021 it registered a large surplus of $4,454 million or 1.49% of GDP. In Q3 2021, the financial and capital account in the balance of payments also recorded a much larger surplus than in the preceding quarter, for an overall balance of payments surplus of approximately$10,690 million, leading the foreign exchange reserves of the Central Bank to a level of $146,870 million in September 2021. Foreign exchange reserves declined slightly, to $145,461 million, in October.
The Central Board of Statistics also released the balance of trade data for October 2021. Exports increased significantly, by 6.89%, to reach $22,026.2 million in October, with non-oil exports also up significantly, by 6.75% to $21,000.9 million. At the same time, imports also increased, but more marginally, by 0.36%, to reach $16,293.1 million, resulting in a large trade surplus of $5,733.1 million, a record surplus so far. The increase in exports was due to the commodity boom in October, as well as the rise of a new commodity category, iron and steel. The trade surplus is predicted to persist in the coming months.
The Central Board of Statistics also released the inflation report, which showed mild inflation for the month of October at 0.12%. With that performance, Y/Y inflation stood at 1.66%, a level below the target corridor of the Central Bank. The Central Bank was of the view that the economy is improving steadily. Therefore, with inflation subdued, and the exchange rate and foreign exchange reserves at comfortable levels, Bank Indonesia decided to keep the bench mark rate at 3.50%.
Based on its current achievements, the Indonesian government deserves praise for its good management of the pandemic situation and its likely impact on the economy. The current situation is a strong foundation for prosperity in the medium and long term.
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