Current Account Deficit Decreased, External Sector Resilience Controlled - Bank Sentral Republik Indonesia
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December 01, 2020

No. 20/42/DKom 

Current account deficit decreased in Q1/2018 to support the resilience of Indonesia’s external economic sector. The current account deficit was recorded at USD5.5 billion (2.1% of GDP) in Q1/2018, lower than the previous quarter's deficit of USD6.0 billion (2.3% of GDP). The decrease in current account deficit was mainly influenced by lower services account deficit and higher secondary income surplus. The drop in services deficit was primarily on account of increased surplus of travel services as the number of foreign tourist arrivals growing and decrease in imports of freight services. Increase in the secondary income surplus was in line with the increasing receipts of remittances from Indonesian migrant workers. Meanwhile, the non-oil and gas trade surplus narrowed as non-oil and gas exports declined. The non-oil and gas imports also decreased albeit at a moderate pace, with imports of capital goods and raw materials remained at a high level in line with increased production and investment activities.

Capital and financial transactions in Q1/2018 still registered a surplus amid high uncertainty in the global financial markets. The capital and financial account surplus in Q1/2018 was recorded at USD1.9 billion, mainly supported by remained high direct investment inflows. This reflects a remained positive investors' perceptions on Indonesia's economic prospects. Nevertheless, the capital and financial account surplus in Q1/2018 was lower than the surplus in the preceding quarter. The declined surplus was inseparable from the impact of heightened uncertainty in global financial markets resulting with adjustments to the foreign fund placements in the stock market and government bond market. The lower surplus was also affected by deficit in other investment, primarily due to increase in private sector deposit placements in overseas banks.

Overall, Indonesia's balance of payments (BOP) in Q1/2018 recorded a deficit in line with the decrease in capital and financial account surplus. The BOP deficit in Q1/2018 was USD3.9 billion. With the development, the official reserve asset position at the end of March 2018 was registered at USD126.0 billion. The amount of reserve assets was equivalent to the 7.7 month financing of imports and government external debt and was above the international standard of adequacy.

Looking ahead, the BOP is predicted to remain favorable so that able to continue supporting the external sector resilience. Bank Indonesia will keep a close watch on global developments that may affect the BOP prospects, including increased global financial market uncertainty, the tendency of inward-oriented trade policy in some countries, and rising world oil prices. Bank Indonesia continues to optimize the monetary and macroprudential policy mix, as well as strengthen policy coordination with the Government in particular to encourage the continuation of structural reforms, thereby maintaining the resilience of Indonesia's external sector.

Further information and data are presented in the Q1/2018 Indonesia Balance of Payments Report of Bank Indonesia website.

Jakarta, 11 May 2018
Communication Department

Arbonas Hutabarat

Notes: - The next publication of Indonesia’s Balance of Payments statistics is scheduled on 10 August 2018.



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