● Exportsfell sharplyin May (-28.9% YoY; consensus: -18.0%; Apr: -7.2%)itsthirdmonth of contractionand the steepest decline since March 2009 as COVID-19 crisis hammered global trade

- MoM: fell for the second straight month (-13.4%; Apr: -13.5%) to USD10.5b.

● Weak external demand due to the pandemic-triggered crisis weighed on overall export growth

- Oil & gas (-42.6%; Apr: -24%): fell for the eleventh straight month due to a declined in O&G mining exports (-47.0%; Apr: - 24.7%) but partially supported by a rebound in export of O&G manufacturing based products (16.8%; Apr: -20.4%).

- Non-oil & gas (-27.8%; Apr: -6.2%): growth plunged to the lowest since February 2009 led by its mining segment (-38.1%; Apr: -29.5%), followed by manufacturing (-25.8%; Apr: 1.8%) and agriculture (-25.6%; Apr: 11.8%). By country, shipment to the top 3 trading partner fell sharply led by the US (-33.3%; Apr:-10.8%) followed by Japan (-31.0%; Apr:-2.1%) and China (-2.3%; Apr: 6.0%).

● Imports fell sharply by 42.2% YoY (consensus:-24.6%;Apr:-18.6%)led by big declinesin oil & gas (-69.9%; Apr:-61.8%) as well as non oil & gas (-37.3%; Apr: -11.2%) based imports

- By major segments, the fall was attributable to a broad-based slowdown led by raw materials (-31.6%; Apr: -14.4%), followed by capital goods (-6.4%; Apr: -2.6%) and consumer goods (-4.2%; Apr: -1.6%).

- MoM: imports fell sharply (-32.7%; Apr: -6.1%) to USD8.4b, lowest import value since July 2009 signalling subdued domestic demand going forward.

● Trade balanceturnedinto a surplusofUSD2.1b(consensus: USD0.4b; Apr: -USD0.4b), a three month high, and beating market expectation. Meanwhile, total trade fell sharply to -35.5% YoY (Apr: -13.4%), lowest since March 2009.

● 2020 export forecast revised further down to -10% to -5.0% from -5.0% to -2.0% (2019: -7.0%)

- Year-to-date, exports fell sharply by 6.0% YoY (Jan-Apr: 0.4%) in line with house expectations due to the impact of movement restriction imposed by the local government and key trading partners to fight the pandemic.

- Nevertheless, trade surplus remained positive, which reaffirmed Rupiah's strength and may provide a justification for Bank Indonesia to continue its monetary easing at this week's monetary policy meeting.

Source: Kenanga Research - 16 Jun 2020