Oil and Fuel Imports
In this photograph taken on August 28, 2013, a worker processes imported soybeans from US into tempeh at a factory in Malang in eastern Java island. Indonesia's trade deficit unexpectedly hit a record high in July, data showed on September 2, adding further pressure on policymakers to shore up the economy as investors flee the country as it faces an increasingly grim future. (AFP Photo/Aman Rochman)
Indonesia posted a record monthly deficit in July, brought on by high imports of crude oil and petroleum products, suggesting that the current account deficit could widen in the third quarter.
The trade deficit widened to $2.31 billion in July, bringing this year's cumulative deficit to $5.65 billion, the Central Statistics Agency (BPS) said on Monday. In June, the deficit was $850 million.
Imports in July reached $17.42 billion, compared to exports of $15.11 billion. The deficit for crude oil and petroleum products totaled $1.85 billion, but excluding those, non-oil and gas trade deficit amounted to $454.4 million.
Rising demand for vehicles has pushed up the purchase of crude oil and fuel, namely gasoline, diesel and kerosene. The government has tried to alleviate the pressure on high demand for fuel by raising the subsidized fuel prices by average 33 percent in June. In July's deficit figures for oil and gas accounted for 80 percent of the total shortfall.
The Indonesian government was urged to further reduce its fuel subsidies by the Standard & Poor's rating agency as a planned reduction of US Federal Reserve easing took its toll on emerging economies. Foreign investors pulled out of Indonesia amid concerns of slower growth and the widening current account deficit, driving the rupiah down to a four-year low and sending the stock market spiraling.
The central bank raised its key interest rate to 7 percent in a bid to head off further depreciation of the rupiah. Without serious policy changes, the nation faces an economic "rocky road" in the short-term, S&P warned.
In terms of trade with other countries, China accounted for the biggest deficit in non oil and gas in July, at $1.32 billion, and then followed by Thailand at $526.2 million. Still, Indonesia had a trade surplus in non oil and gas with the United States at $663.4 million and with India at $654.2 million.
In the January-July period, imports totaled $111.3 billion, while exports totaled $106.18 billion. The oil and gas sector cumulatively recorded a $7.63 billion deficit, while the non-oil and gas sector posted a surplus of $1.92 billion.
In the first seven months this year the largest deficit by country was with China at $5.65 billion, followed with Thailand at $3.53 billion. Indonesia posted a surplus with India at $5.31 billion and with the United States at $3.6 billion.
On an annual basis, exports rose 2.4 percent in July while imports surged 11 percent.
Indonesia had a current account deficit — which is the broadest measure of trade — of $9.8 billion in the second quarter, which was a record amount.
— Additional reporting by Reuters
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