January exports weaken as demand slows: BPS

JAKARTA (JP): Export earnings in January dropped by 5.66 percent to US$4.84 billion from $5.13 billion in December partly due to slowing export demands, the Central Bureau of Statistics (BPS) said on Friday.

BPS's monthly report said that export earnings only declined in the non-oil and gas sector, which fell by 10.37 percent to $3.50 billion from the previous month.

BPS' export statistics chief Dantes Simbolon said that the January non-oil and gas export drop was seasonal, as it had been occurring for the past nine years.

"World demand for that month is low," Dantes told reporters after a press meeting.

He added though that Indonesia's exports were also hurt by a global slowdown of the economy.

He said Indonesia's main export destinations were developed countries whose economies were hit hard by a slump in demand.

Export to Japan dropped by $103.2 million, followed by the United States with $86 million, and China with $64.3 million.

Locally, a seasonal drop in supply of agriculture goods affected the exports from agriculture related industries every January, he said.

By sector, the biggest export drop was of iron ash, crust and core, with $173.2 million, followed by animal and vegetable fat with $54.8 million, and garments with $39.2 million, BPS' report said.

Oil and gas exports, however, rose by 9.37 percent to $1.34 billion, albeit not enough to offset the overall export drop.

BPS said that while world crude oil prices have dropped, Indonesia managed to sell more crude oil and natural gas.

It said that exports of natural gas alone climbed by 15.57 percent to $779.6 million in January.

Higher gas export earnings were made possible with the start of the West Natuna gas sales project to Singapore in January.

January's export earnings sank to below the past month's average export levels of $5 billion.

Indonesia's exports breached for the first time the $5 billion level in June last year.

This has helped Indonesia to reach a record level of total export earnings last year of $62.02 billion.

However, since the fourth quarter of last year, export figures have been steadily falling.

Analysts fear that an upward trend in exports was unlikely in the near future, given the weak rupiah and a slump in the world economy.

The weaker rupiah could make non-oil exports more competitive but to many exporters, especially those who import most of their raw materials it will be a blow to their production costs.

Prevailing security and political uncertainties further cast doubts on whether the rupiah can reverse its downward trend.

BPS deputy Kusmadi Saleh said the weakening rupiah was reflected in the lower import spending in January.

Import spending in January dropped by 10.54 percent to $3.03 billion, on weaker crude oil prices and lower imports volume.

The biggest drop was the import in the oil and gas sector, which fell by 18 percent. Imports in the non-oil and gas sector dropped by 9.85 percent.

"The drop in imports due to the weaker rupiah, shows that our export products have a high import content," Kusmadi said.

He added that the high dependence on imported goods, was the result of the government attracting footloose industries in Indonesia.

Indonesia's trade surplus for January rose to $1.81 billion from $1.74 billion in the previous month.

BPS also reported that the February consumer price index rose by 0.87 percent from the previous month, on the back of higher raw food prices.

The year-on-year inflation was 9.14 percent, it said.

February's biggest inflation contributors were the increase in the price index of raw food by 1.69 percent, followed by a price index surge of 0.70 percent of processed foods, beverages, cigarettes and tobacco.

Kusmadi said that this year's inflation rate might reach between 6 to 8 percent.

"As long as distribution channels remain intact, political situations will not have much impact on the inflation rate," he said.

However, he said, politics could affect the rupiah's movement, which in turn might lead to an increase of imported inflation.

Kusmadi added the government's move to hike fuel prices next April might push up the inflation by 0.4 percent to 0.8 percent. (bkm)