Indonesia is likely to post another trade surplus in March, according to DBS Bank. The country is expected to post import growth of -11.8% y/y in March, added DBS Bank. This implies that demand in the country continues to be weak, noted DBS Bank. The trade balance is expected to have recorded a surplus of around USD 400 million. As the trade surplus is expected to have been driven by weak import growth and not solid growth in export, this should not be seen as a positive sign, said DBS Bank.
It is important that the imports data has to be observed closely as it gives an indication regarding the domestic demand strength. The persistent fall in capital goods imports is a worrying trend. Moreover, there is no sign of bottoming out, added DBS Bank.
This is mostly due to continuous decline in investment on equipment and machinery, according to DBS Bank. In the past three years, investment in equipment and machinery was mostly negative, after a period of strong growth in 2011-2012. Indonesia’s imports are unlikely to witness a strong recovery anytime soon, looking at the import’s data, noted DBS Bank. Moreover, the imports data also shows that growth in consumption has been stronger than growth in investment, added DBS Bank.
The material has been provided by InstaForex Company – www.instaforex.com