Trade Deficit: BRI Economists Warn of Rupiah Pressure and Credit Risk Implications for Banks

The Office of Chief Economist Group at Bank Rakyat Indonesia (BRI) has assessed that the recent trade deficit carries several implications for the banking sector. In May 2026, Indonesia recorded a trade deficit for the first time since April 2020, amounting to US$1.61 billion. In its research report, the BRI economist team stated that the trade deficit could increase pressure on rupiah stability due to reduced foreign exchange supply from trade activities. “This condition increases the need for hedging facilities for importer debtors, thereby opening up opportunities for the expansion of hedging services,” they noted in the BRI Regular Economic Update report.

The BRI economist team highlighted the increasing share of China as the main non-oil and gas export destination, amidst a decline in the share of the United States, India, and Malaysia. On the import side, China remains the primary source, accounting for 42 per cent of total non-oil and gas imports. The rising concentration of trade with China, according to the team, could increase debtor sensitivity to an economic slowdown or supply chain disruptions from that country, necessitating closer scrutiny from a credit portfolio risk management perspective.

Furthermore, investment credit is predicted to grow more moderately, in line with the slowdown in capital goods imports. “Although imports of raw materials and auxiliary goods remain strong, the outlook for working capital loan demand remains subdued, in line with Indonesia’s Manufacturing PMI which has fallen into contraction territory,” the team stated. Despite these headwinds, the BRI economists project that trade performance could improve in the future, supported by recovering manufacturing activity in key export destination countries, a potential slowdown in raw material imports due to weakening domestic manufacturing, and rising prices of coal and crude palm oil (CPO).