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Stock Index
Bahana Securities

23 Jun 2018 | 07:19 WIB
INDEX
SCORE
POIN
%
COMPOSITE
6.067,087
52,268
0,869%
Last 1 day
IDX30
526,492
3,551
0,679%
Last 1 day
MBX
1.718,699
17,373
1,021%
Last 1 day
DBX
964,133
-1,999
-0,207%
Last 1 day
KOMPAS100
1.248,419
12,390
1,002%
Last 1 day
BISNIS-27
530,769
4,503
0,856%
Last 1 day

Currencies
Bahana Securities

23 Jun 2018 | 07:19 WIB
KURS
BUY
SELL

Terms of trade: Firming up

December’s trade balance was firm at USD992mn with export data showing mild growth in the non-O&G sector at +18.1% y-y (November: +28.8% y-y), due to higher commodity prices for the month, such as coal prices at USD87/Mt (+76.3% y-y) and CPO prices at USD717.2/Mt (+34.7% y-y). On a m-m basis, the highest export increase was from mineral fuels at USD1,692.8m (+9.1% m-m) and ore at USD440.1m (+29.2% m-m).

 

For oil & gas, the drop in prices of crude oil (-9.1% y-y) and gas (-7.8% y-y) triggered a 5.2% y-y drop in overall exports. Volume-wise, exports grew by 4.8% y-y (November: +12.1% y-y), with the highest O&G export volume contributed by gas procurement at 1,809.4% y-y, as well as a 5.3% y-y rise in non-O&G export volumes.

 

On the aggregate front, export prices were up 10.3% y-y, with a drop in O&G export prices of 4.7% y-y. For imports, the trade surplus was supported by a 6.2% y-y decline in O&G imports (November: +5.1% y-y), while non-O&G imports were up by 7.9% y-y (November: +10.8% y-y).

 

On a m-m basis, the highest import amount increase came from jewellery at USD307.3m (+49.0% m-m) and ship and floating building at USD163.5m (+103.4% m-m). Meanwhile, the highest drop was from machine and electrical equipment, which dropped to USD1,473.1m (-7.1% m-m). On the O&G front, gas imports fell the most (-29.2% y-y), followed by crude oil (-12.1% y-y).

 

Volume-wise, import volumes were lower 6.9% y-y (November: +3.3% y-y), while aggregate import prices increased strongly by 13.6% y-y (November: +6.5% y-y), with both non-O&G and O&G volumes having risen 13.7% y-y and 5.2% y-y, respectively.

 

In 2016, the full-year trade balance was recorded at USD8.8bn (+14.5% y-y), with export support coming from the non-O&G side as manufacturing exports reached USD109.8m (+1.1% y-y), while agriculture-related and mining-related exports fell to USD3.4bn (-7.8% y-y) and USD18.1bn (-6.75% y-y), respectively.

 

Hence, this full-year number does not fully reflect the higher commodity-price environment. Even though support for commodity prices is still there, the recent escalation in Indonesia’s import-price index (exhibit 1) together with higher expected inflation is limiting commodities’ positive impact to the terms of trade (exhibit 2), despite our expectations of the terms of trade remaining firm in 2017 due to expectation of higher commodities price.

 

On the policy side, a relaxation in ore-export regulations should also add some positive impact to the export figures for 2017. Early next month, we will have an announcement on current account balance data. Positive developments on trade data lead us to expect a CAD of 1.9% of GDP for 4Q16.

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