May 2026 Trade Deficit Complicates BI's Efforts to Maintain Rupiah Stability

The Central Statistics Agency (BPS) reported that Indonesia’s goods trade balance experienced a deficit of US$1.61 billion, equivalent to Rp28.89 trillion, in May 2026. This record has come under sharp scrutiny as it ends a surplus trend that had persisted for 48 consecutive months. INDEF economist Didik J. Rachbini assessed that this condition creates dual pressure for the Rupiah exchange rate. According to him, the current weakening of the Rupiah is a reflection of the fragility of Indonesia’s external sector, especially when the trade balance and the services balance are both contracting. “All this time, even though the trade balance was in surplus, we were heavily burdened by the services balance, so the Rupiah’s strength was inadequate. In a situation where the trade balance is in deficit, we are facing two deficit items at once, namely the services balance and the trade balance,” Didik told Media Indonesia on Wednesday (1/7). Didik emphasised that the swelling current account deficit will complicate matters for Bank Indonesia (BI) and the government in maintaining exchange rate stability. As a short-term solution, he suggested the government immediately harness export potential from diverse natural resources, ranging from coal and nickel to fishery products, to restore the surplus. Besides focusing on trade, Didik reminded of the importance of maintaining fiscal policy credibility. He highlighted the need for improvements on the state revenue and expenditure side this semester. “The Free Nutritious Meals programme (MBG) must exercise restraint, and the state budget (APBN) must be directed into productive sectors,” he said. Internal political factors were also mentioned as playing an important role in maintaining market confidence. Didik opined that if policy credibility is maintained, the opportunity to sustain economic growth at the 5% level or even reach 6% is still wide open through the development of investment and industrialisation. However, he provided a critical note that without concrete steps to boost exports and maintain fiscal stability, the 5% economic growth target will be very difficult to sustain amidst current global and domestic pressures.