72-Month Trade Surplus Streak Ends, Sounding Economic Alarm
Jakarta - Indonesia’s trade surplus has finally ended after holding steady for 72 months since May 2020. Statistics Indonesia (BPS) reported the country’s trade balance suffered a deficit of US$1.61 billion in May 2026.
The swing from surplus to deficit has drawn sharp attention from economists. Bank Permata economist Josua Pardede stated the trade deficit serves as a warning signal, reflecting a combination of weakening exports and very strong imports.
“This trade deficit is a warning signal, not just an ordinary monthly figure. The main problem is not just that imports are higher than exports, but the combination of weakening exports and fairly aggressive import growth,” Josua told CNBC Indonesia.
The value of exports in May 2026 fell 5.73% year-on-year to US$23.20 billion, while imports rose 22.16% to US$24.81 billion. Cumulatively from January to May 2026, a trade surplus of US$4.03 billion remains, but this is sharply down from US$15.38 billion in the same period the previous year.
“This means Indonesia’s external cushion is starting to thin. A rise in imports of raw materials and capital goods is not always bad if used to boost future production and exports, but it becomes a problem if the increase leaks more into oil and gas, consumer goods, or intermediate materials that do not quickly generate foreign exchange,” he explained.
The government needs to ensure rising imports are truly productive, accelerate the strengthening of domestic raw material industries, and promote value-added manufacturing exports so the trade balance does not become increasingly dependent on commodities.
Regarding oil and gas imports, the war in the Middle East is indeed a significant factor as it increases energy price uncertainty, shipping costs, and the need for businesses to secure supplies. However, the oil and gas deficit cannot be explained by the war alone.
“The government needs to strengthen energy reserves, accelerate domestic refinery and processing improvements, promote energy conservation, expand alternative energy, and reorganise fuel pricing policies so they do not suddenly pressure households and industry,” he said.
Meanwhile, BCA economist David Sumual said the current trade deficit indicates a slowdown in export performance amid persistently strong import demand. “The depreciation of the exchange rate and high global oil prices are the main factors behind the rise in imports,” David said. The combination of high oil prices and exchange rate depreciation has driven up oil and gas imports. “Maintaining exchange rate stability is the main priority at the moment, given the weakening in our export performance,” David explained.
BTN economist Myrdal Gunarto assessed that the trade deficit recorded in June was quite heavy, but conditions are relatively improving. “The June trade balance was indeed rather heavy, as long as oil prices remain volatile. But for June or later in July, conditions are relatively improving,” Myrdal said. He added that for the June 2026 period, the trade deficit has actually been seen narrowing to around US$320 million. He even predicts the trade balance will return to surplus in July as global oil prices ease. “From our perspective, for July 2026, it looks like the trade balance could return to positive, provided oil prices go back to levels below US$75 per barrel,” he stated.
Coordinating Minister for Economic Affairs Airlangga Hartarto revealed the trade deficit in June was due to rising oil and gas prices. Nevertheless, Airlangga said there is hope the trade balance will return to surplus going forward as the Middle East conflict, the trigger for rising global oil and gas prices, begins to subside. “So it is a result of changes, perhaps in oil prices, so this has a direct impact. Of course, we hope their plans for a peace ceasefire will be seen again in a month or two,” Airlangga said at his office in Jakarta.
Despite the trade deficit, Airlangga noted Indonesia’s trade position remains sound because the non-oil and gas sector is still in surplus, driven by exports of the country’s reliable natural resources. “If we look at the non-oil and gas balance, it is still positive, around US$2 billion. If we look at other figures, exports of our CPO, coal, and ferroalloy are relatively at similar levels,” he said.