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Indonesia's Balance of Payments (BOP) in the second quarter of 2023 was maintained despite global uncertainty. The current account recorded a narrow deficit against a backdrop of lower international commodity prices and global economic moderation, coupled with increasing domestic demand. Meanwhile, the capital and financial account posted a manageable deficit in line with elevated global financial market uncertainty. Consequently, Indonesia's BOP in the second quarter of 2023 recorded a USD7.4 billion deficit and the position of reserve assets at the end of June 2023 stood at USD137.5 billion, equivalent to 6.0 months of imports and servicing government external debt, which is well above the international adequacy standard of around 3 months of imports.
The current account recorded a narrow deficit against a backdrop of lower international commodity prices and global economic moderation, coupled with ongoing domestic economic improvements. In the second quarter of 2023, the current account recorded a USD1.9 billion deficit (0.5% of GDP) after recording a USD3.0 billion surplus (0.9% of GDP) in the previous period. A large non-oil and gas trade surplus was maintained despite retreating from the previous period. Such development was affected by lower non-oil and gas exports in response to falling international commodity prices and global economic moderation, while imports posted a limited decline amid improving domestic economic activity. The oil and gas trade deficit widened, given high fuel consumption driven by greater mobility and increasing demand during the recent national religious holidays (HBKN). Furthermore, the services trade deficit and primary income account deficit also increased as domestic economic activity accelerated, coupled with dividend payment trends in the reporting period.
Capital and financial account performance in the second quarter of 2023 remained manageable, supported by direct investment despite persistently elevated global financial market uncertainty. Direct investment remained solid, thus booking a surplus, as a reflection of positive investor perception concerning the promising domestic economic outlook. Meanwhile, portfolio investment and other investment recorded deficits due to the impact of increasing global financial market uncertainty as well as payments on maturing foreign loans and global bonds in line with the quarterly trends. Consequently, the capital and financial account in the second quarter of 2023 recorded a USD5.0 billion deficit (1.4% of GDP) to reverse the USD3.7 billion surplus (1.1% of GDP) in the previous period.
Bank Indonesia observes that maintained BOP performance in the second quarter of 2023 continued to support external resilience in Indonesia. Moving forward, Bank Indonesia will remain vigilant of global economic dynamics that could influence the BOP outlook and continue strengthening the policy mix response, supported by close policy synergy with the Government and other relevant authorities to reinforce external sector resilience.
Further information and data are presented in the Second Quarter of 2023 Indonesia Balance of Payments Report accessible via the official Bank Indonesia website.
Jakarta, 22nd August 2023
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