Indonesia’s economy gets some relief

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jakarta streetIndonesia on October 1 reported a surprise trade surplus for August 2013, its first in five months, offering some relief to the ailing rupiah, but the country’s current account deficit will likely keep weighing on Asia’s weakest currency this year.

Southeast Asia’s largest economy had a trade surplus of $130 million in August, compared with a record $2.3 billion deficit the previous month. A Reuters poll had expected an August deficit of $890 million. Only one participant, Bank of America Merrill Lynch, had forecast a surplus.

The rupiah edged higher after the trade data, touching an intraday high of 11,530 to the dollar compared with 11,540 just before the announcement.

Concerns about the current account deficit, which the trade balance is a part of, have pushed down the rupiah, which has lost about 16 per cent against the dollar this year.

However, in a further worrying sign for the economy, exports and imports were markedly weaker than expected. August exports fell 6.31 per cent from a year ago, versus forecasts for a gain of nearly 3 per cent, while imports declined 5.69 per cent, compared with forecasts for a rise of nearly 10 per cent.

Prior to last year, Indonesia always had an annual trade surplus, thanks to oil and other exports. But now it regularly has monthly trade deficits, reflecting how it is now a net oil importer and recent weakness in prices for its commodity exports.

In the April to June period, the current account deficit was 4.4 per cent of gross domestic product (GDP), adding to investors concerns over the government’s ability to fund the economy. The annual inflation rate was at 8.40 per cent in September.

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Reading Time: 2 minutes

Indonesia on October 1 reported a surprise trade surplus for August 2013, its first in five months, offering some relief to the ailing rupiah, but the country’s current account deficit will likely keep weighing on Asia’s weakest currency this year.

Reading Time: 2 minutes

jakarta streetIndonesia on October 1 reported a surprise trade surplus for August 2013, its first in five months, offering some relief to the ailing rupiah, but the country’s current account deficit will likely keep weighing on Asia’s weakest currency this year.

Southeast Asia’s largest economy had a trade surplus of $130 million in August, compared with a record $2.3 billion deficit the previous month. A Reuters poll had expected an August deficit of $890 million. Only one participant, Bank of America Merrill Lynch, had forecast a surplus.

The rupiah edged higher after the trade data, touching an intraday high of 11,530 to the dollar compared with 11,540 just before the announcement.

Concerns about the current account deficit, which the trade balance is a part of, have pushed down the rupiah, which has lost about 16 per cent against the dollar this year.

However, in a further worrying sign for the economy, exports and imports were markedly weaker than expected. August exports fell 6.31 per cent from a year ago, versus forecasts for a gain of nearly 3 per cent, while imports declined 5.69 per cent, compared with forecasts for a rise of nearly 10 per cent.

Prior to last year, Indonesia always had an annual trade surplus, thanks to oil and other exports. But now it regularly has monthly trade deficits, reflecting how it is now a net oil importer and recent weakness in prices for its commodity exports.

In the April to June period, the current account deficit was 4.4 per cent of gross domestic product (GDP), adding to investors concerns over the government’s ability to fund the economy. The annual inflation rate was at 8.40 per cent in September.

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