An Analysis of Indonesian Economic Performance Based on Net Export Values from 2015 to 2020

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‘‘Opportunities and Challenges for Sustainable Learning, Research and Community Service in Covid-19 Pandemic Constraints’

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An Analysis of Indonesian Economic Performance Based on Net Export Values from 2015 to 2020

Zainuddin¹ and Muhammad Farras Mufadhdhal²

1 Universitas Serambi Mekkah

² Universitas Syiah Kuala

*Corresponding Author: Zainuddin, e-mail: [email protected]

Abstract

This study aimed to find out the economic performance of Indonesia based on the net export values measured annually by the Indonesian Central Statistics Agency. The data collected from the agency to be used for this study were the total monthly export and import values of Indonesia from 2015 to September 2020. A descriptive qualitative approach was used for data analysis. The results showed that Indonesia had the poorest economic performance in 2018 and 2019 because the export values in these two years were much lower than the import values. Good economic performances of Indonesia was found in 2015, 2016, 2017, and 2020 (January to September) because the export values during these years were greater than the import values. The best performance was in 2020 with the highest net export value of all. Thus, in the last six years, it can be said that the Indonesian economic performance was not excellent, but it was still fairly good.

Keywords: Net Exports, Exports, Imports, and Economic Performance

1. Introduction

Import and export activities are an essential part of a nation’s economic life in these modern days. These activities are also called international trade because a country imports and exports goods and services to and from other countries (Li, 2019). Typically, the imported commodities are those that are domestically unavailable or unproducible while the exported ones are those that are not available in other countries. The commodities can be in the form of goods or services. Along with foreign capital, the commodities in the export and import commodities can help increase a country’s economic growth (Marwah & Tavakoli, 2004;

Sokolov-mladenovi & Mladenovi, 2016).

The economic performance of a country can be seen from its ability to increase its exports rather than imports. Exports are positively correlated to economic growth while imports are otherwise (Uddin & Khanam, 2017; Julio, 2020). Dritsaki & Stiakakis (2014) also stated there is a causal relationship between exports and economic growth. The higher the exports, the higher the economic growth (Chang et al., 2013). Exports can also have an impact on a high flow of foreign investment into a country (Ganeshamoorthy, 2018). In addition, exports can create an export-oriented business expansion (Lafuente et al., 2020). A high rate of exports can reflect a maturity in the social, technological, economic, political, international relations, natural resources, transportation, and institutional or organizational fields (Thowseaf, 2016).

Net exports of a country indicate the economic growth and performance of a country (Akalpler, 2017). Net export is the difference between a country’s value of imports and value of exports. If a country wants the availability of its foreign exchange to increase, it then has to increase its net exports and vice versa. Similarly, if it wants to increase its economic growth, it must increase its exports (Mao et al., 2019).

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51 Net exports largely contribute to the Gross Domestic Product (Jason et al., 2011). Thus, high net exports are essential for the balance of a country’s economy and the global economy (Gilaninia et al., 2013). The formula of Gross Domestic Product (GDP) is GDP = C + I +G + (E – M), where C = Consumption of all citizens, I = Investment, G = Government expenditure, E = total exports and M = total imports (Jason et al., 2011; Taylor & Bharati, 2011; Uddin &

Khanam, 2017; Akalpler, 2017; Kartikasari, 2017; Mao et al., 2019). The formula of net exports is NE = E – M, where NE = Net Exports, E = Total Exports, and M = Total Imports.

Like other countries, Indonesia is practicing international trading activities and its net export is measured monthly. The trading activities of Indonesia are highly likely to be increased since Indonesia is rich in marine and agricultural commodities that can be exported in the form of raw materials or finished products. Some of Indonesia’s exportable commodities are fishery products, industrial products in the form of handicrafts, as well as manufactured products.

Industries in many different sectors, such as the spinning industry, the textile industry, the wood industry, and building materials from wood with high selling prices, are also carried out to increase the number of exports and export competitiveness (Wahyuningsih, 2017). As exports have a strong correlation with a country’s economic growth, Indonesia thus needs to increase its exports so that the net export values can increase, leading to increased economic growth and fulfilled national economic needs. The export activities should be more active, including in the ASEAN region (Poetra, 2019).

The economic performance of Indonesia in recent years has not been analyzed yet. In fact, identifying the performance is necessary to find out how the economic development has been in the country and how much the government should improve. This study thus was conducted to fill in the gap by assessing Indonesian economic performance from its net export values in the last six years (2015 to September 2020)

2. Method

The data used for the analysis were the total imports and exports of Indonesia every month in 2015, 2016, 2017, 2018, 2019, and 2020, measured by the Indonesian Central Statistics Agency. The difference between the export and import values was found using the previously mentioned net export equation. A descriptive qualitative approach was used to analyze the data.

In this data analysis, there are four steps that should be done (Akinyode, 2018; Basias, 2018) as follows:

1. Data Collection.

In this stage, a researcher should seek information or data from various sources, such as from books and/or the internet. This was done by the authors by visiting the website of the Indonesian Central Statistics Agency to collect the necessary data for the study.

2. Data Reduction.

This stage involves selecting, simplifying, and transforming data to make it easier to manage and understand.

3. Data Display

This stage helps qualitative researchers organize information and view it in a way that allows them to identify linkages and develop explanations that link their findings to existing theories.

4. Drawing and Verifying Conclusion.

This stage involves deciding what themes and patterns to be identified and how they can help answer the research question. Verification involves checking and re-checking data to ensure initial conclusions are realistic and valid.

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52 3. Results and Discussions

The net export values from 2015 to September 2020 are shown in the following table:

Table 1. The Values of Indonesia's Net Exports from 2015 to September 2020 (in US $)

Months

Net Export Values

2015 2016 2017 2018 2019 2020

January 632,227,959.53 114,888,466.98 1,423,910,762.81 733,151,932.22 977,105,042.74 636,684,174.95

February 662,691,463.67 1,141,102,750.51 1,256,569,745.09 53,111,716.07 323,483,187.66 2,512,799,616.59

March 1,025,350,247.14 510,417,536.93 1,435,291,110.88 1,047,015,656.18 701,167,156.35 715,763,306.38

April 478,318,019.38 876,121,015.03 1,319,076,719.58 1,666,051,300.53 2,331,117,597.08 (372,096,587.79)

May 1,141,073,558.69 376,729,512.88 561,306,260.55 1,464,548,147.74 145,231,442.71 2,015,652,000.28

June 536,010,127.06 1,110,902,269.22 1,669,808,814.86 1,673,854,594.72 267,965,074.51 1,249,025,438.37

July 1,383,916,260.41 632,344,873.97 278,746,939.73 2,012,425,173.69 280,057,512.96 3,238,371,824.99

August 326,789,416.73 368,767,733.13 1,678,794,401.89 953,015,679.95 92,611,972.89 2,353,373,169.23

September 1,029,758,040.70 1,282,239,012.95 1,791,924,144.80 346,290,356.23 183,340,429.81 2,390,423,317.04

October 1,012,824,313.30 1,236,556,340.73 1,003,384,144.06 1,758,546,051.72 122,375,423.91 -

November 397,285,960.70 833,485,662.69 221,212,522.61 2,050,093,914.78 1,395,988,327.32 -

December 160,186,166.28 1,049,839,570.41 239,919,473.38 1,074,892,879.83 77,966,210.90 -

Source: www.bps.go.id (Processed data)

Based on the table above, the development of the net export value each year can be illustrated as follows:

Figure 1. Net Exports in 2015

Figure 1 above shows that in 2015, the highest net export value was in July while the lowest one was in November. Negative values were found in two months, namely in November and December, indicating that the export value was lower than the export value.

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53 Figure 2. Net Exports in 2016

Figure 2 above shows that in 2016, the lowest net export value was in January while the highest one was in September 2016. It is also clear that in this year, the net export value was high in each month, indicating that the export value was higher than the import value in this year.

Figure 3 above shows that in 2017, the highest net export value was in September while the lowest one was in July. There were two months in 2017 with negative values, namely in July and December, suggesting that the value of Indonesian exports was lower than that of Indonesian imports.

Figure 4 above shows that in 2018, the highest value of net exports was in June while the lowest one was in November. The rest of the months in 2018, however, showed negative net export values, indicating that the export values were smaller than the import values.

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54 Figure 5. Net Exports in 2019

Figure 5 above shows that in 2019, the highest net export value was in March while the lowest one was in April. There were six months in 2019 in which Indonesia had low net export values, namely January, April, July, September, November, and December. The most negative net export value was found in April 2019.

Figure 6 above illustrates that in 2020 (from January to September), the highest net export value was in July while the lowest one was in January 2020. In April, there was also a significantly negative value, indicating that the export value was smaller than the import value.

Of all the years, 2016 had the highest number of months with positive values while 2018 had the least. In 2016, a positive value was found in each month of the year, indicating the best economic performance of Indonesia. In contrast, in 2018, a negative net export value was found in eight months of the year, indicating the poorest economic performance of Indonesia. In 2019, there were six months found to have negative net export values, which were only slightly different from those of 2018, indicating a poor performance. The year 2015, 2017, and 2020 (from January to September) were found to have two months with positive export values, indicating a significantly good economic performance of Indonesia.

The total net export value each year is illustrated in the following figure:

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55 Figure 7. Total Net Export Value for Each Year Observation

Viewing figure 7, it is clear that the highest net export value was in 2020 ($13,466,627,910.14), although the observation was done only from January to September 2020. The second highest value was found in the year of 2017 ($11,842,612,214.02), followed by 2016 with the value of $9,533,394,745.43, and by 2015 with the value of $7,671,487,279.63.

In contrast, 2018 and 2019 had the most negative values, namely 8,698,676,189.40 and

$3,592,740,862.78 respectively, indicating that the export values of Indonesia in these two years were far below the import values.

4. Conclusion

The net export values of Indonesia fluctuated during the years observed, with the lowest values was found in 2018 while the highest one was in 2020. If the observed years were put in sequence, starting from the year with the highest performance to that with the poorest, 2020 would come first, followed by 2017, 2016, 2015, 2018, 2019. Thus, it can be concluded that Indonesian economic performance in the last six years (2015-2020) was not optimal, but it was still relatively good.

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