Tue, 04 May 2010

Indonesia’s exports soared by 54 percent year-on-year during the first quarter, and 13 percent during March, providing further evidence that the economic recovery is gaining ground, analysts said.

The Central Statistics Agency (BPS) reported on Monday that total exports reached $35.4 billion during the first quarter, up from $23.03 billion during the year-earlier period.

Imports surged 57 percent during the first quarter to $30 billion, from $19.09 billion during the same quarter last year. The result was a healthy $5.4 billion trade surplus for the first three months of 2010, up from $3.94 billion during the same period a year ago.

“On the trade front, we think the rises in commodities prices and the sustained recovery in the global industrial cycle will continue to help underpin Indonesia’s exports,” said Ma Tieying, a Singapore-based economist at DBS Group Research. “As the low-base effect gradually dissipates, we expect export growth to cool to about 15 percent year-on-year in the fourth quarter of 2010. We also note that import growth has been outpacing export growth in recent months, which could be an indication of accelerating recovery in domestic demand.”

The low-base effect refers to the plummeting export figures of early 2009, during the low point of the global economic crisis.

On a monthly basis, total exports rose 13.01 percent to $12.63 billion in March, and total imports rose 16.32 percent to $11.05 billion, making for a trade surplus of $1.58 billion on the month.

“We should note that this slight dip in trade surplus arises from a robust import growth [rather than a weakness in exports], which is another indication of a sustained pick-up in domestic demand,” said Gundy Cahyadi, of OCBC Bank’s treasury research and strategy group.

Deputy Trade Minister Mahendra Siregar said non-oil-and-gas imports were dominated by capital goods, showing a strong pattern of recovery in domestic demand and private-sector expansion. Mahendra said imports for capital goods during the first quarter reached $5.95 billion, an increase of 39.7 percent year on year.

But Ma of DBS warned that she expected a cooling of exports and stronger import demand, causing the monthly trade surplus to narrow to about $1 billion from the second half onward.

“Essentially, we think the strongest recovery in exports is already behind us. As the effects of global fiscal and monetary stimulus measures dissipate, the rising trend in export demand is likely to moderate.

“The low-base effects for year-on-year export growth will also gradually disappear in the second half of 2010. The major reason for the reduction in trade surplus in fact would come from the import side,” Ma said.