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Stock Index
Bahana Securities

23 Oct 2019 | 17:13 WIB
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23 Oct 2019 | 17:13 WIB
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May trade figures: Unexciting surplus

Worse than market estimates, May exports declined 15.24% y-y and 4.11% m-m to USD12.6bn. This followed a decline of 8.32% y-y for April, mainly due to continued weak global demand and lower oil prices, which resulted in decreased oil & gas exports, down 42% y-y (April: -45% y-y).

On the non-oil & gas side, May figures remained subdued but relatively better compared to oil and gas exports and only decreased 10.1% y-y and 3.9% m-m to USD11.2bn, due to slower exports for mineral products (-15.7% m-m), vehicles (-10.8% m-m) and rubber (-10.1% m-m).


Worse than the street's estimates, May imports saw persistent decline, down 21.4% y-y and 8.1% m-m, mainly on continued IDR weakness and lower oil prices which led aggregate average prices of Indonesian imports dipping 16% y-y to USD1,015/ton in May 2015 (May 2014: USD1,211/ton).


Despite the upcoming Ramadhan & Lebaran festivities and expected pick-up of government projects in 2Q15, both consumer goods and raw materials imports continued to fall 14.5% y-y and 18.9% respectively (Exhibit 1). In addition, May imports (2 months prior to Lebaran) decreased 8.05% m-m and 21.40% m-m, bucking previous trends in the last 5 years when imports accelerated 2 months prior to Lebaran (Exhibit 2). Thus, we think this suggests continued weak domestic demand and slow economic growth with our revised-down 2015F GDP growth of 5.02% y-y remaining intact.


Trade figures were much better than the street's estimates with May trade balance having booked a surplus of USD955m (April: USD477m), bringing the 5M15 trade surplus to USD3.86bn (5M14: -USD0.84bn), the highest Jan-May surplus since 2012, mainly caused by lower oil & gas imports (Exhibit 3).


Looking ahead, we expect the foreign trade balance to remain in surplus for 1H15, but expect the June import figure to start to accelerate on higher raw materials and capital goods demand for several sizable government projects starting in 2Q15.


On the flip side, we expect exports to remain sluggish amid continued low commodity prices and weak global economies. Additionally, this improved trade balance should help to improve 2Q15 current account deficit (CAD), which we estimate to reach 3.2% of GDP (2Q14: 4.27% of GDP), before improving to 2.3% by the end of 2015. 

However, we believe this expected improvement in 2Q15 CAD will not be sufficient for the Central Bank to cut its 7.50% policy rate due to expected higher inflation in the medium term, continued IDR weakness and future Fed rate hikes.


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