Indonesia's Current Account Deficit Hits US$12.5 Billion, Largest in History

Indonesia’s Balance of Payments (BOP) showed improvement in the second quarter of 2026. However, behind the narrowing BOP deficit, the current account recorded the largest deficit in the history of available data.

Bank Indonesia (BI) reported that the BOP in the second quarter of 2026 posted a deficit of US$0.9 billion. This was far lower than the deficit of US$9.1 billion in the first quarter of 2026.

“Indonesia’s Balance of Payments (BOP) performance in the second quarter of 2026 remained resilient amid persistently high global uncertainty,” BI wrote in its report.

The improvement was supported by strong foreign capital inflows through direct investment and portfolio investment.

However, a different situation occurred in the current account. Its deficit widened to US$12.49 billion, from US$3.58 billion in the previous quarter.

“The current account recorded a higher deficit driven by an increase in the oil and gas trade balance deficit and a decline in the non-oil and gas trade balance surplus,” BI explained.

The widening current account deficit indicates that Indonesia’s spending on imports of goods, services, and income payments to foreign parties increased far more than the receipts obtained.

Current Account Deficit Breaks Record

Indonesia’s current account in the second quarter of this year recorded a very large deficit.

The value of US$12 billion was the largest current account deficit in nominal terms in history, or at least based on data available since the first quarter of 2004.

The previous record occurred in the second quarter of 2013 when the current account deficit reached US$10.13 billion.

The magnitude of the pressure is also evident when compared with the previous period. In the first quarter of 2026, the current account deficit was still at US$3.58 billion.

Within three months, the deficit widened by approximately US$8.91 billion, or more than threefold.

The widening deficit also pushed up the current account-to-gross domestic product (GDP) ratio.

In the second quarter of 2026, the current account deficit reached 3.34% of GDP, up sharply from 0.97% in the first quarter of 2026.

This was the highest level since the fourth quarter of 2018, when the current account deficit reached 3.72% of GDP.

What Caused It?

The main cause of the widening current account deficit was the shrinking goods trade surplus.

In the first quarter of this year, Indonesia’s goods balance still recorded a surplus of US$8.21 billion. However, three months later, the surplus dropped drastically to only US$1.32 billion.

The decline reached US$6.89 billion, or approximately 83.92%.

The shrinking goods balance surplus contributed approximately 77.31% of the total widening of the current account deficit compared with the previous quarter.

The goods trade surplus narrowed because the surge in imports could not be matched by export growth.

In the second quarter of 2026, goods imports jumped 23.87% to US$72.11 billion, from US$58.21 billion previously.

Conversely, exports only increased 10.54% to US$73.43 billion, compared with US$66.42 billion in the first quarter of 2026.

The increase in imports reached US$13.89 billion, almost twice as large as the additional exports of US$7.00 billion.

Swelling Oil and Gas Import Bill Becomes the Trigger

The greatest pressure on the goods trade balance came from the oil and gas sector.

The oil and gas trade deficit doubled from US$5.09 billion in the first quarter of 2026 to US$10.18 billion.

The widening deficit occurred because oil and gas imports surged 64.75% from US$7.97 billion to US$13.14 billion. Meanwhile, oil and gas exports only increased slightly from US$2.89 billion to US$2.96 billion.

The surge in imports occurred amid rising world oil prices due to the war between the United States (US) and Iran.

The conflict disrupted shipping activity in the Strait of Hormuz, one of the world’s most important oil trade routes. Distribution disruptions and supply concerns then pushed global oil prices higher.

Referring to Refinitiv data, the average Brent oil price rose 23.35% from US$78.38 per barrel in the first quarter of 2026 to US$96.68 per barrel in the second quarter of 2026.

Oil prices even briefly touched US$126 per barrel at the end of April.

Throughout April and May, the average Brent price also remained above US$100 per barrel, at US$102.46 and US$103.71 per barrel respectively.

The increase in oil prices enlarged the energy import bill.

Based on the breakdown, the oil balance deficit increased from US$6.00 billion in the first quarter of 2026 to US$10.24 billion in the second quarter of 2026.

The value of oil imports jumped from US$7.29 billion to US$11.61 billion. Conversely, exports only rose from US$1.30 billion to US$1.37 billion.

Pressure also came from gas trade. The gas balance surplus shrank from US$908.48 million to only US$61.25 million.

Gas exports were relatively stagnant at around US$1.59 billion, while imports increased from US$682.36 million to US$1.53 billion.

The widening oil deficit and shrinking gas surplus then widened the oil and gas deficit to US$10.18 billion, and became the main cause of the thinning of Indonesia’s goods trade surplus.

Services Account Deficit Also the Largest

It was not only goods trade that deteriorated. Indonesia’s services balance also recorded the largest deficit in history.

In the second quarter of 2026, the services deficit reached US$5.89 billion, or jumped by US$1.5 billion compared with US$4.39 billion in the previous quarter.

The increase in the services deficit contributed approximately 16.86% of the total widening of the current account deficit.

The services balance deficit is actually not a new problem. Based on Bank Indonesia data from the first quarter of 2004 to the second quarter of 2026, Indonesia’s services balance has always been in a deficit position in every quarter.

This condition shows that Indonesia’s payments