PT Bank Central Asia Tbk 20th Grand Indonesia, BCA Tower Jl. M.H Thamrin No. 1 Jakarta, Indonesia Ph : (62-21) 2358-8000
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Trade: Bumper surplus amid global energy crunch
Executive Summary:
• Trade registered another massive surplus (USD 4.37 Bn) as commodity prices soared amid the global energy crunch.
• The bifurcation in imports mirrors the bifurcation in the domestic economy, with consumer spending recovering faster than business spending.
• The global coal shortage could be compounded by the lack of capacity expansion by Indonesian producers, in addition to DMO-related export ban on several miners.
• Commodity prices should remain favorable until year-end, buoyed by the end of the Delta wave and the La Nina weather phenomenon.
• We revise our FY 2021 forecasts not only for the trade surplus (to USD 32.0 Bn) and current account (to a 0.1% surplus relative to GDP), but also for GDP growth (to 4.0% YoY) and the USD/IDR exchange rate (to 14,215).
• Indonesia recorded yet another big trade surplus in September, at USD 4.37 Bn, despite noticeable dips in exports (-12.6% MoM) and imports (-11.5%) on working- day average basis. As in August, soaring commodity prices worked strongly in Indonesia’s favor, with large increases in the prices of coal (+25.1% MoM), gas (+34.0%), and CPO (+7.4%).
• As mentioned in our previous report, trade surpluses on the order of USD 3-4 Bn is in line with current (terms of trade-adjusted) commodity prices (Chart 1) – even taking into account potential declines in metal prices as China’s property sector cools. As such, we upgrade our FY projection for the trade surplus to USD 32.0 Bn, while our CA projection flips to surplus territory albeit narrowly, at +0.1% of the GDP (see Forecast Table).
• Imports, meanwhile, showed a curious bifurcation (Chart 2), with consumer goods and raw materials maintaining momentum while capital goods slowing down substantially. The former is easier to explain as the confluence of rising prices, pent-up consumer demand, and post-Delta recovery in the domestic manufacturing sector. The latter, meanwhile, jibes with our findings from BCA transaction data that business spending continues to lag both business revenue and consumer spending, and also with industry- wide loan data that shows weaker demand for productive vis-à-vis consumer loans.
• This relative conservatism extends even to thriving commodity sectors such as coal, which could further complicate the current global energy crunch given Indonesia’s key role as a global supplier. Thus
far, the increase in Indonesian coal exports to China has come mainly due to higher prices rather than higher volumes. And with the government cracking down on several miners that has not fulfilled their domestic market obligation (DMO) amid the decline in PLN’s inventory, there is a clear ceiling to this coal windfall going forward even if global shortages persist.
• Still, we expect global commodity prices to remain favorable until year-end, aided by the end of the Delta wave and the ensuing increase in global mobility (even international travels). Meanwhile, the La Nina weather phenomenon could compound the current shortages even further, as it leads to colder winters in the Northern hemisphere and increased rainfall in Indonesia and Malaysia (which could affect CPO production).
• Finally, we also revise our GDP growth expectations for FY 2021 from 3.6% to 4.0%, in the light of both the export over-performance and also the strong demand recovery post-Delta. Our upgrade contrasts with recent revisions from foreign forecasters such as the IMF, which generally downgrade this year’s GDP forecast while upgrading next year’s. We argue that while this is applicable on the global level and especially for advanced economies, Indonesia’s status as a commodity exporter with strong price controls on energy should lead to stronger growth this year. On the other hand, next year’s outlook could be affected (albeit slightly) if the price controls are partly relaxed and/or some of the external inflationary pressures begin passing through to domestic prices.
Monthly Economic & Finance Briefing
Economic, Banking & Industry Research of BCA Group
Note issued: October 15th, 2021
I N D O N E S I A E C O N O M I C U P D A T E
PT Bank Central Asia Tbk 20th Grand Indonesia, BCA Tower Jl. M.H Thamrin No. 1 Jakarta, Indonesia Ph : (62-21) 2358-8000
Chart 1. High commodity prices could translate to large trade surpluses for Indonesia for the next few quarters
Chart 2. The divergence between consumer goods and capital goods imports mirror the strength of consumption recovery vs. business spending
-3000 -2000 -1000 0 1000 2000 3000 4000 5000 6000
0 50 100 150 200 250 300
Mar-09 Dec-10 Aug-12 Apr-14 Dec-15 Aug-17 May-19 Jan-21 Sep-22
Source: Bloomberg, BPS, calculations by BCA Economist
index (average 2009-19 = 100)
◼ Trade balance (rhs)
― Terms of trade-adjusted commodity price index (lhs)
USD Mn
59.7%
10.1%
43.2%
-40%
-20%
0%
20%
40%
60%
80%
Jan-18 May-18 Oct-18 Mar-19 Aug-19 Jan-20 Jun-20 Nov-20 Apr-21 Sep-21
Consumer Goods Capital Goods
Raw materials (ex. Oil)
YoY working days adjusted (WDA)
Source:BPS
actual
forecast based on future prices
1 5 O C T O B E R 2 0 2 1
I N D O N E S I A E C O N O M I C U P D A T E
3
Selected Recent Economic Indicators
Source: Bloomberg, BI, BPS Notes:
*Previous data
**For change in currency: Black indicates appreciation against USD, Red indicates depreciation
***For PMI, > 50 indicates economic expansion, < 50 indicates contraction Key Policy Rates Rate (%) Last
Change
Real Rate (%)
Trade &
Commodities 14-Oct -1 mth Chg (%)
US 0.25 Mar-20 -5.15 Baltic Dry Index 5,062.0 4,163.0 21.6
UK 0.10 Mar-20 -3.10 S&P GSCI Index 585.9 533.4 9.8
EU 0.00 Mar-16 -3.40 Oil (Brent, $/brl) 84.0 73.5 14.3
Japan -0.10 Jan-16 0.30 Coal ($/MT) 219.8 165.8 32.6
China (lending) 4.35 Oct-15 3.65 Gas ($/MMBtu) 5.43 5.18 4.8
Korea 0.75 Aug-21 -1.75 Gold ($/oz.) 1,795.9 1,793.8 0.1
India 4.00 May-20 -0.35 Copper ($/MT) 10,131.0 9,550.5 6.1
Indonesia 3.50 Feb-21 1.90 Nickel ($/MT) 19,320.0 19,761.0 -2.2
CPO ($/MT) 1,208.7 1,104.7 9.4
Rubber ($/kg) 1.70 1.59 6.9
SPN (1M) 2.87 3.47 -59.8
SUN (10Y) 6.16 6.14 1.7
INDONIA (O/N, Rp) 2.79 2.79 -0.3 Export ($ bn) 20.60 21.43 -3.8
JIBOR 1M (Rp) 3.56 3.55 0.6 Import ($ bn) 16.23 16.68 -2.7
Trade bal. ($ bn) 4.37 4.75 -8.0
Lending (WC) 9.00 9.02 -2.01
Deposit 1M 3.39 3.47 -7.96
Savings 0.75 0.81 -5.48
Currency/USD 14-Oct -1 mth Chg (%) Consumer confidence
index (CCI) 95.5 77.3 80.2
UK Pound 0.731 0.723 -1.19
Euro 0.862 0.847 -1.81
Japanese Yen 113.7 110.0 -3.25
Chinese RMB 6.440 6.452 0.19
Indonesia Rupiah 14,118 14,253 0.96 Capital Mkt 14-Oct -1 mth Chg (%)
JCI 6,626.1 6,088.2 8.84
DJIA 34,912.6 34,869.6 0.12
FTSE 7,207.7 7,068.4 1.97 USA 61.1 59.9 120
Nikkei 225 28,550.9 30,447.4 -6.23 Eurozone 58.6 61.4 -280
Hang Seng 24,962.6 25,813.8 -3.30 Japan 51.5 52.7 -120
China 50.0 49.2 80
Korea 52.4 51.2 120
Stock 2,146.6 2,017.2 129.35 Indonesia 52.2 43.7 850
Govt. Bond 961.8 980.4 -18.67
Corp. Bond 24.0 24.4 -0.36
N/A -1.0 1.9
Chg (bps) Aug
Sep Money Mkt Rates 14-Oct -1 mth Chg
(bps)
Bank Rates (Rp) Jul Jun Chg
(bps)
Foreign portfolio
ownership (Rp Tn) Sep Aug Chg (Rp Tn)
External Sector
Prompt Indicators
Car sales (%YoY)
Manufacturing PMI Cement sales (%YoY) Motorcycle sales (%YoY)
Central bank reserves ($ bn)
22.0 48.2 28.9
Sep Aug Chg
(%)
Aug Jul
Sep
146.9 144.8 1.46
73.2 123.5 163.6
1 5 O C T O B E R 2 0 2 1
I N D O N E S I A E C O N O M I C U P D A T E
4
Indonesia – Economic Indicators Projection
** Estimation of Rupiah’s fundamental exchange rate
2016 2017 2018 2019 2020 2021E
Gross Domestic Product (% YoY) GDP per Capita (US$)
Consumer Price Index Inflation (% YoY) BI 7 day Repo Rate (%)
USD/IDR Exchange Rate (end of year)**
Trade Balance (US$ billion)
Current Account Balance (% GDP)
5.0 3605
3.0 4.75 13,473
8.8 -1.8
5.1 3877
3.6 4.25 13,433
11.8 -1.6
5.2 3927
3.1 6.00 14,390
-8.5 -3.0
5.0 4175
2.7 5.00 13,866
-3.2 -2.7
-2.1 3912
1.7 3.75 14.050
21.7 -0.4
4.0 4055
2.3 3.50 14.215
32.0 0.1
PT Bank Central Asia Tbk
Economic, Banking & Industry Research of BCA Group 20th Grand Indonesia, Menara BCA
Jl. M.H Thamrin No. 1, Jakarta 10310, Indonesia Ph : (62-21) 2358-8000 Fax : (62-21) 2358-8343
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Economic, Banking & Industry Research Team
David E. Sumual Chief Economist
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Agus Salim Hardjodinoto Barra Kukuh Mamia Victor George Petrus Matindas
Industry Analyst Economist / Analyst Industry Analyst
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Gabriella Yolivia Derrick Gozal Livia Angelica Thamsir
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Ahmad Aprilian Rizki Arief Darmawan
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