Indonesia Posts Trade Deficit in Blow to Recovery Hopes
Indonesia's trade balance unexpectedly swung back to a deficit in September, official data showed Friday, in a setback for Southeast Asia's beleaguered top economy after recently shown signs of recovery.
The news of the $657.2 million deficit followed a small surplus in August and a string of other positive indicators, including easing inflation and an uptick in the manufacturing sector.
Indonesian stocks and the currency plummeted earlier this year as investors fled on fears that the U.S. Federal Reserve was poised to bring an end to its huge stimulus program.
The economy has stabilized in recent weeks, due to the positive indicators and the Fed's unexpected decision to keep in place its full $85 billion a month bond-buying program.
But economists said the September deficit would heap further pressure on the ailing rupiah and widen the current account deficit, which has been a key factor in the country's economic woes.
Credit Suisse said the market was expecting a trade surplus and that Friday's data was "disappointing", noting that the deficit "is not yet even stabilizing".
"This is disappointing and obviously poses risks for the currency," Credit Suisse economist Robert Prior-Wandesforde said in a note.
Trade had plummeted to a record $2.31 billion deficit in July but the August surplus marked a strong rebound.
The rupiah has been one of Asia's worst performing currencies this year and slipped to 11,360 from 11,350 to the dollar after the trade figures were announced, Dow Jones Newswires reported.
However, there was some good news Friday, as inflation slowed slightly from 8.40 percent year-on-year in September to 8.32 percent in October, official data showed.
Inflation soared following a hike in fuel prices in June and festivities in August for the Muslim Eid holiday.
The central Bank Indonesia has lifted its main interest rate 150 basis points since June, to 7.25 percent, in a bid to shore up the rupiah and fight inflation.
Source: Agence France Presse
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