real-time news and commentary for investors
Monday, Sep 2
Indonesia trade deficit hits record, stocks sink
- Indonesia's trade deficit widened to a record $2.3B in July as exports fell 6.07% Y/Y while imports rose 6.5% and 11.4% Y/Y and M/M respectively.
- "The ugly reading suggests that the current-account deficit will likely stay wide and remain at about 4% of GDP or higher in Q3," BofA says. The bank's forecast had been 3.5% — the figure was 4.4% in Q2.
- Despite today's rather disconcerting data, one local economist says the deficit should still narrow to 3.3% this quarter as government measures to address the problem (such as higher import taxes and the phasing out of a luxury tax on domestic products) take effect.
- "The widening deficit shows how serious Indonesia’s economic condition is," one analyst tells Bloomberg, explaining today's 2.2% sell-off in Jakarta.
- Bank Indonesia will likely remain under pressure to hike rates further after last week's 50 bps move, as inflation remains an issue. Prices rose 8.8% in August, the highest since 2009.
- Indonesia ETFs: IDX, EIDO, IDXJ