Indonesia economy: November foreign trade
Fakhrul Fulvian +6221 2505081 ext. 3602 (fakhrul.fulvian@bahana.co.id)
Sarah Hutapea +6221 2505081 ext. 3693 (sarah.jessica@bahana.co.id)
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November trade figures: Higher imports = Growth support
Exports: -17.58% y-y (BS: -19.81%; Cons: -11.50%); In line
§ Oil & gas exports -24.92% y-y to USD1,582m; Non-oil & gas exports -16.75% y-y to USD9,582m: Oil & gas exports plunged 24.92% y-y, although up 14.67% m-m, while non-oil & gas exports dropped 16.75% y-y or -10.81% m-m (Oct: -16.59% y-y). The largest decline came from fats & animal/vegetable oils, which contracted USD152.8mn m-m, while the largest increase was in footwear exports, which improved USD65.3mn m-m, while pearl fell USD140.2mn m-m, machine/electrical equipment decreased USD120.2mn and vehicles were down USD114.3mn.
§ Export volumes dropped, together with prices: Export volumes declined 11.72% y-y or -6.26% m-m (October: -0.50% y-y) on continued lackluster demand in global markets. We think export volumes are bottoming (exhibit 5), as on an annualized basis the decrease moderated to -10.57% y-y in November (October: -12.51%).
Imports: -18.03% y-y (BS: -26.82%, Cons: -21.30%); Higher than our and consensus estimates
§ Oil & gas imports -52.76% y-y or -6.95% m-m: Lower oil & gas imports were led by decreased oil-product imports of USD103.2m m-m (10.15% m-m), as well as lower gas imports of USD33.3m m-m (-17.98% m-m), which caused a deficit of USD58.6m in the oil & gas trade balance (Oct: USD377.6m deficit). However, crude-oil imports continued to rise 2.49% m-m while annualized import volumes continued to increase, despite lower pace to 1.09% y-y (Oct: 1.42% y-y).
§ Non-oil & gas imports -6.62% y-y or +5.60% m-m: Non-oil & gas imports fell 6.62% y-y but rose 5.60% m-m to USD9,869mn. Compared to October 2015, the highest improvements in non-oil & gas were jewelery/gems which jumped USD255.7mn m-m, followed by machines and electrical equipment at USD146.0mn m-m, beans at USD128.4mn m-m, steel and iron at USD82.9mn, and steel and iron products at USD56.3mn.
The highest decline was in ships and floating structures, which dropped USD75.5mn. In total, the trend is improving, notably for consumer goods at -5.46% y-y or 25.48% m-m (Oct: -24.78% y-y), raw-materials imports at -20.64% y-y or +3.12% m-m (Oct: -28.66% y-y) and capital goods at -11.39% y-y, -2.62% m-m (Oct: -23.75% y-y).
A sign of modest recovery
November represents a month of both negative trade balance after the drop in oil prices in 2015 as well as the first negative non-oil & gas trade balance since April 2014 (exhibit 7). The reason for the trade deficit is similar to that of April 2014, when non-oil and gas imports increased significantly by 19.31% m-m, while exports declined 7.25% m-m, supported by a rebound in capital goods and raw materials imports. We think the biggest difference between that period and the current scenario is the low oil price (Brent oil average 2015 ytd: USD54.5/bbl, 2014: USD75.7/bbl). Thus, we expect the deterioration in the trade balance to be limited at this oil-price level. On the growth side, we point to some reversal in import trend (exhibit 8) as a sign of economic recovery, although we await December data for confirmation.