Indonesia’s Balance of Payments Increased Significantly in Q3/2017 - Bank Sentral Republik Indonesia
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November 20, 2017

No. 19/85/DKom

Indonesia’s Balance of Payments (BOP) in Q3/2017 recorded an increased surplus supported by narrowing current account deficit and mounting capital and financial account surplus. The BOP surplus in Q3/2017 stood at USD5,4 billion, up significantly from USD0,7 billion surplus in the previous quarter. The surplus led to an increase in official reserve assets from USD123.1 at the end of Q2/2017 to USD129.4 billion at the end of Q3/2017. The amount of reserve assets was adequate to finance 8.6 months of imports and government external debt repayment and well above the international standards of reserve adequacy.

The current account deficit was USD4,3 billion (1.65% of GDP), improved on USD4,8 billion (1.91% of GDP) defisit in the previous quarter on the back of increase in goods trade surplus and decrease in the primary income deficit. The Q3/2017 current account deficit was also lower than Q3/2016 deficit of USD5,1 billion (2.09% GDP). Increase in goods trade surplus was driven by rising exports, both in value and volume, surpassing imports that also increased along with growing domestic demand. Meanwhile, decrease in primary income deficit was mainly influenced by a seasonal pattern of lower dividend payments.

Meanwhile, the capital and financial account surplus increased significantly mainly supported by mounting influx of direct investment inflows in line with optimism on domestic economic performance. The capital and financial account surplus in Q3/2017 amounted to USD10.4 billion, increased considerably from USD5.8 billion surplus in the previous quarter and also higher than USD9.9 billion surplus in Q3/2016. The increased surplus was driven by a surge in direct investment inflows, in line with soaring domestic investment, and dwindling other investment deficit, particullarly on account of lesser outflows of domestic private deposits overseas. Further increase in capital and financial account surplus was detained by a decrease in portfolio investment surplus mainly due to outflow of foreign funds from the domestic stock market.

The overall balance of payment development in Q3/2017 indicates a maintained external balance of the economy and paves the way for supporting a sustained macroeconomic stability. Bank Indonesia will continue to wary of global developments, in particular risks related to the monetary and fiscal policies in the US and geopolitical pressures in some regions, which may effect the overall balance of payments performance. Bank Indonesia believes that the balance of payments performance will be better supported by the monetary and macroprudential policy mix, as well as strengthening policy coordination with the Government, especially in encouraging the continuation of structural reforms.

Further information and data are presented in the Q3/2017 Indonesia Balance of Payments Report of Bank Indonesia website.

Jakarta, 10 November 2017
Communication Department

Agusman
Executive Director

Notes:
- The next publication of Indonesia’s Balance of Payments statistics is scheduled on 9 February 2018.

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