Trade Minister Mari Pangestu said on Tuesday that exports were set to fall next year due to weak global economic growth, but predicted that a recovery could occur in the second half of the year.
“The first half of 2009 will be the most difficult period,” she said, adding that she was unable to estimate as yet how big the drop would be.
She said exports would decline as demand for Indonesia’s commodities and manufactured goods fell in the country’s main trading partners, particularly the US.
PT Bank Danamon Tbk economist Anton Gunawan said he expected exports next year to decline by some 6 percent after likely growth of 10 percent this year. Exports stood at $114 billion in 2007, up 14 percent from 2006.
“We are likely to see a significant drop in the first half, but it should flatten out toward the end of the year,” Gunawan said.
Export growth slowed to just 4.9 percent year on year in October compared to 28.5 percent the previous month. On a monthly basis, the value of exports dropped 11.61 percent, according to data released on Monday by the Central Statistics Agency, or BPS.
The agency said Indonesia posted exports of $10.81 billion in October, compared to $12.23 billion in September. The fall was driven by a 25.7 percent drop in oil and gas exports, which totaled $1.81 billion, and an 8.1 percent decline in non-oil-and-gas exports to $9 billion from $9.8 billion the previous month due to weaker international prices and lower demand for Indonesia’s main commodities, including rubber and rubber products, cocoa, crude palm oil, coal and tin.
Indonesia’s exports for the first 10 months of 2008 still managed to reach $118.43 billion, up 26.92 percent on the same period in 2007, reflecting stronger activity in the first half of this year.
Japan continued to be Indonesia’s biggest export market in October, followed by the United States and Singapore, which serves as a transshipment port for Indonesia. Exports to Japan rose 11.3 percent to $1.38 billion in October from $1.24 billion the previous month. However, exports to the United States tumbled 24.8 percent to $922.7 million from $1.22 billion in September, while exports to Singapore were little changed at $797.8 million.
Bachrul Chairi, head of the Trade Ministry’s National Agency for Export Development, said Indonesian exports to Japan for the remainder of this year should continue upward, but would fall by between 5 percent and 10 percent next year.
“Japan has apparently not been affected by the world economic crisis as seriously as the United States or the European Union, and the country’s industry is showing resilience and maintaining production,” Bachrul said.
However, PT Bank Internasional Indonesia Tbk economist Juniman disagreed with Bachrul’s view. He said that given the dramatic slowdown in the world economy, Japanese manufacturers would also reduce production, which would ultimately reduce the demand for Indonesian products.
Juniman said he expected Japanese demand for Indonesian exports to fall by between 5 percent and 10 percent, while demand from the US and European countries could fall by between 30 percent and 50 percent.
Overall, Juniman said, Indonesia’s exports could fall by between 5 percent and 10 percent next year compared with this year.