Economist says Indonesia's export fundamentals remain strong despite May contraction

Jakarta (ANTARA) - Center of Reform on Economics (CORE) Indonesia economist Yusuf Rendy Manilet has assessed that Indonesia’s export fundamentals remain strong, despite non-oil and gas exports contracting by 4.5 percent year-on-year in May 2026. The weakening was more influenced by declines in a number of specific commodities, while cumulative export performance still recorded growth. “If we dissect the 4.5 percent contraction in non-oil and gas exports in May 2026, the source of the pressure is actually quite concentrated and not a weakening that occurred across almost all commodities,” he said in Jakarta on Friday. Statistics Indonesia (BPS) reported that the country’s export value in May 2026 reached 23.2 billion US dollars, down 5.73 percent compared to the same period last year. This decline was mainly triggered by the drop in non-oil and gas exports. The value of non-oil and gas exports reached 22.45 billion US dollars, a contraction of 4.5 percent compared to May 2025. In April 2026, Indonesia’s export value was recorded at 25.30 billion US dollars, growing 21.98 percent. By commodity, the largest decline in non-oil and gas exports in May 2026 came from exports of precious metals, jewellery, and gems, which fell by 59.35 percent, contributing a negative share of around 2.93 percent to the performance of non-oil and gas exports. In addition, exports of metal ores, slag, and ash plummeted by 99.25 percent, while iron and steel exports fell by 14.68 percent. According to Manilet, the decline in metal ore exports is a consequence of the government’s policy banning raw material exports as part of efforts to encourage downstream processing. “So this is more a consequence of policy rather than a signal of weakening export competitiveness,” he added. Meanwhile, the correction in precious metal exports was influenced by the normalisation of gold prices after a very high rally in the previous year, making the comparison base effect less favourable. He added that the weakening of iron and steel exports was still triggered by the lack of recovery in demand from China, especially due to the weak property and construction sectors in that country. He noted that the US reciprocal tariff of 19 percent is beginning to add pressure to Indonesian exports. However, he assessed that the impact so far has been felt more by the textile, footwear, and electronics industries, and has not yet become the main cause of the weakening of non-oil and gas exports in May. Despite this, Manilet believes Indonesia’s export fundamentals are still maintained. Cumulatively, from January to May 2026, non-oil and gas exports still grew by 3.89 percent to 110.19 billion US dollars. This growth was supported by an increase in exports of several downstream products, including processed nickel products which rose by more than 61 percent, crude palm oil (CPO) which grew by around 8.6 percent, and basic inorganic chemicals which surged by more than 84 percent. “This shows that downstream processing is starting to generate added value that can cushion the pressure from the weakening of several main commodities. Therefore, a contraction in one month should not immediately be read as a sign that Indonesian exports are entering a phase of broader weakening,” he said.