Exports to collapse further, but imports
to fall even more
􀀗 Current account to switch from deficit to
surplus of 1.2% of GDP in 2009...
􀀗 …alleviating investor concerns and risk
of another crisis
Trade balance to the rescue
Indonesia’s current account has been in the red for two
consecutive quarters – a first since the Asian financial crisis.
This has led some investors to become concerned, especially
in an environment of slowing foreign direct investment
flows. Our analysis indicates that the direction of the current
account is largely a function of the trade balance and so we
have looked at the dynamics of exports and imports in detail.
Here it comes as little surprise to find that exports are going
to collapse further. In fact, export performance is going to be
worse than at the time of the Asian financial crisis and also
the dot com bust given the synchronised recession in the
developed world and rapidly weakening demand from Asia.
But what is perhaps more interesting is that imports are
expected to fall even more. This not only reflects the close
relationship between exports and imports but also cooling
domestic demand given the lagged impact of the previous
policy tightening and some spillover from the external
sector. Historically, Indonesia’s imports tend to be much
more volatile than its exports, rising more on the way up and
declining more on the way down.
A word on oil – Indonesia is a net importer meaning that a
collapse in crude oil prices helps improve the trade balance,
contrary to conventional wisdom. Overall, we look for the
trade surplus to widen significantly, although the other
components of the current account – services, incomes and
transfers – are liable to worsen in the current environment.
Putting all this together, we expect the current account to flip
into the black with a surplus of 1.2% of GDP in 2009. If we
are correct, then the external accounts and the country’s
relatively healthy financial system suggest that the risk of
Indonesia entering a crisis-like situation is remote.

目录

Back to deficit - should we be
worried? 3
A sense of déjà vu 3
The cause 3
The task at hand 5
Exports 6
Introduction 6
Exports: key facts 6
What’s been happening? 8
Export model 8
Imports 13
Introduction 13
What’s been happening? 14
Modelling imports 15
Trade balance 20
Introduction 20
What’s going on? 20
Model answers 21
Current account 24
Small current account surplus 24
What’s the cause? 24
Putting it all together 26
Disclosure appendix 30
Disclaimer 31
Contents