JAKARTA (Aug 15): Indonesia booked a trade surplus of around US$470 million (RM2.1 billion) in July, far less than economists had expected, as imports surged and despite exports expanding at a rapid rate, official data showed on Thursday.

A Reuters poll of economists had expected a surplus of US$2.45 billion last month. In June, the surplus was US$2.39 billion.

The July surplus was the smallest since May 2023, according to Statistics Indonesia.

Analysts have said that the trade surplus in Southeast Asia's largest economy this year would narrow, as the rise in imports was expected to outpace exports, reflecting strong domestic demand.

"In general, we see the decline in our trade balance position as a sign that domestic activity remains relatively strong, for production and consumption," said Myrdal Gunarto, an economist with Maybank Indonesia.

The sharp narrowing of the surplus, however, may stop Bank Indonesia (BI) from making early rate cuts, Barclays economist, Brian Tan, said in a report. The central bank would likely keep rates unchanged in its policy meeting next week, he said.

"Historically, poor trade balance figures have been a factor that can halt cutting cycles ... at a time when BI might be waiting for greater certainty on the Fed before it eases monetary policy," Tan said.

Tan expected BI to start cutting rates in September, with a forecast of bringing borrowing costs down by a total 75 basis points this year.

The small surplus came despite improving exports from the resource-rich country. While export receipts were under pressure from soft commodity prices earlier this year, Indonesia has seen annual growth each month since April.

In July, exports rose 6.46% from the same month a year earlier to US$22.21 billion, above the median forecast of 3.85% rise in the poll.

Shipments of palm oil, coal and steel fell in July. But the rise in exports of some other goods such as precious metals and jewelleries, mostly shipped to Japan, Hong Kong and Switzerland, and nickel products, more than offset the drop.

Indonesia also resumed exports of copper concentrate in July.

The nation is the world's biggest exporter of thermal coal, palm oil and nickel, as well as a major exporter of tin, copper, rubber and coffee, among others.

July imports were worth US$21.74 billion, up 11.07% annually, compared with the poll's forecast for a 0.04% rise.

Imports of fuel, smartphones and plastic goods drove the overall rise in July.

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