Mon, 30 Jun 2008
Jakarta (ANTARA News) - Indonesia is expected to report a wider trade surplus in May compared to April as crude palm oil (CPO) exports recovered after falling sharply in the previous month, economists said.

Six out of seven economists polled by Thomson Financial are expecting a trade surplus of from $1.88 billion to $2.74 billion, compared with a surplus of $1.59 billion in April.

In March, the trade surplus was $3.99 billion.

The trade surplus forecasts for May exclude imports into bonded industrial zones.

The government will release the May trade data on Tuesday.

Six economists are expecting exports in May to be higher month-on-month, placing the figure at $10.98 billion to $11.51 billion, compared to April's $10.97 billion.

Meanwhile, four out of seven economists polled expect imports, excluding imports to bonded zones, to weaken in May due to weaker domestic demand. The other three are expecting imports to be higher than the previous month.

Imports in April, excluding imports into bonded zones, amounted to $9.38 billion, up 18.6 percent from March. Total imports, including imports into bonded zones, rose 14.86 percent to $11.5 billion.

The statistics bureau started to include bonded zones in its trade data compilation only from January this year. Imports into the bonded zones are mostly processed for re-export.

"We expect to see some bits of improvement in the trade balance figure, as imports eased slightly from the huge spike in April," said Singapore-based IdeaGlobal Ltd economist Gundy Cahyadi.

"As usual, exports would grow at a strong pace driven by commodities," he said.

Cahyadi said the crucial factor to watch out for would be how fast import growth would slow amid weaker domestic consumption, especially after the government raised subsidized fuel prices by an average of 29 percent in late May.

Danamon economist Anton Gunawan also expects the trade surplus, excluding free-trade zone imports, to have expanded in May due to a recovery in CPO exports. He expects the trade surplus to rise to $2.08 billion in May.

"Exports of vegetable oil (CPO) probably recovered after declining sharply in April, although robust import growth may have somewhat counterbalanced," Gunawan said.

However, if free-trade zone imports are included, the trade balance could still post a small deficit of $25 million, though much narrower than the 524 million deficit in April, he said.

He said rising prices of Indonesia's top commodity exports such as rubber, vegetable oil, coal and oil may have continued to prop up export growth.

"We expect palm oil exporters to have raised their exports again in May after the tax-related slump in April. Machinery and equipment exports likely improved as well, although unwoven garments and footwear may show a downtrend as the U.S. and euro area economies slow," he said.

Imports also likely remained strong in May, especially refined oil, due to rising oil prices and import volumes in the run-up to the fuel price hike in late May, Gunawan said.

"Imports of machinery and equipment, iron and steel, as well as motor vehicles and parts likely remained strong also. This will be reflected in sturdy growth of capital goods imports," Gunawan said.

Below is the summary of forecasts for the April trade surplus, exports and imports (excluding imports to bonded zones):

Lippo Bank: $890 million, $10.98 billion; $10.09 billion
StanChart : $1.88 billion; $10.89 billion; $9.01 billion
BII : $1.78 billion; $10.76 billion; billion 8.98 billion
ING: $1.99 billion: $11.87 billion; $9.88 billion
Danamon: $2.08 billion; $11.56 billion, $9.48 billion
Ideaglobal Ltd : $2.5 billion; $11.69 billion ; $9.19 billion
Danareksa: $2.74 billion; $11.51 billion, $8.77 billion. (*)



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