Indonesia Dec exports up 35%; coal-shipment ban to hit Jan growth

Pearl Bantillo

17-Jan-2022

SINGAPORE (ICIS)–Indonesia’s total exports in December increased by 35.3% year on year, bringing the full-year 2021 average increase at 41.9%, with the country’s recent ban on coal shipments likely to weigh on 2022 growth.

Exports in December totaled $22.4bn, while imports stood at $21.4bn, up 10.5% year on year, official data showed on Monday.

China, the US and Japan, together, accounted for $9.4bn or 44.3% of Indonesia’s exports for the month, while ASEAN’s share was $3.9bn or about 18%.

Full-year 2021 exports were at $231.5bn.

“Both exports and imports maintained their strong y/y [year-on-year] growth in December, but exports contracted sequentially,” said Sung Eun Jung, economist at research firm Oxford Economics, in a note.

December exports slipped 2.0% from the previous month, resulting in the narrowing of the trade surplus to $1.0bn from the peak of $5.7bn in October.

“Exports benefited from elevated commodity prices but fell short of expectations.  Meanwhile, imports accelerated well past forecast as the Indonesian economy gradually reopens after mobility curbs were partially relaxed,” ING Think senior economist Nicholas Mapa said in a note.

Indonesia’s decision to ban coal shipments temporarily in January is expected to weigh on export growth.

The country, which is the world’s largest exporter of thermal coal, moved to curb shipments amid low supplies and concerns over power disruption.

“We expect the near-term coal export ban and the anticipated decline in coal prices from their Q4 2021 peak to lead to a sharp slowdown in export growth this year,” Oxford Economics’ Sung said.

“Meanwhile, recovering domestic demand will support imports and GDP growth, especially in H2 2022,” the Oxford economist added.

ING Think expects southeast Asia’s biggest economy to continue its gradual re-opening, which will mean sustained import growth next year.

“Should the trend of surging imports and disappointing export growth continue, we can expect the trade balance to dip below the highs noted last year,” Mapa of ING Think said.

“A fading trade surplus suggests that support for the IDR [Indonesian rupiah] may wane in 2022, with the currency likely coming under pressure as the Fed readies its projected rate hike cycle,” Mapa added.

Focus article by Pearl Bantillo

($1 = Rp14,322)

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