● August exports YoY growth fell lesser than the preceding month but worse than expected(-8.4%;consensus:-5.8%;Jul:-10.1%)

- MoM: growth turned negative, lowest in three months (-4.6%; Jul: 14.1%) to USD13.1b.

● Broad-based slowdown led by non-oil & gas products

- Non-oil & gas (-7.2%; Jul: -5.9%): contracted to a two-month low, attributable to a steep decline in exports of mining (-24.9%; Jul: -31.0%), followed by manufacturing (-4.5%; Jul: -2.0%). Meanwhile, agriculture exports moderated sharply for the third straight month (1.2%; Jul: 11.5%). By destination, shipment to China slowed (8.6%; Jul: 10.8%) while exports to Japan fell for the sixth straight month (-16.7%; Jul: -13.6%). Bucking the trend, exports to the US expanded marginally (1.6%; Jul: 1.4%).

- Oil & gas (-27.5%; Jul: -51.5%): growth contraction eased due to a lower decline in O&G mining (-26.1%; Jul: -54.5%) and O&G manufacturing based products (-33.2%; Jul: -37.5%).

● Imports remainedweak. Itstayedin a contraction for the fourteenth straight month(-24.2%; consensus:-20.6%; Jul:-32.6%) on broad-based decline in non-O&G (-21.9%; Jul: -31.0%) and O&G product (-41.7%; Jul: -45.2%)

- By segments, the negative growth was attributable to the weak import of raw materials (-24.9%; Jul: -34.5%) followed by capital goods (-27.5%; Jul: -29.3%) and consumer goods (-12.5%; Jul: -24.1%).

- MoM: increased (2.7%; Jul: -2.8%) to USD10.7b.

● Trade balance remained in a surplus for thefourthstraight month. However, it narrowed to USD2.3b (consensus: USD2.2b; Jul: USD3.3b). Overall, total trade remained in a contraction (-16.3%; Jul: -21.4%), for a six straight month.

● 2020 exports forecast retained (-5.0% to -2.0%; 2019: -6.8%) with high probability to be revised down on expectation ofweak external demand and fears of a new wave of COVID-19 infections

- Year-to-date, exports fell by 6.5% YoY (Jan-Jul 2020: -6.2%) reflecting the severe impact of COVID-19 pandemic on Indonesia external demand.

- Given the expected persistent weakness in global trade environment and COVID-19 resurgence fears, we remain cautious on the pace of growth recovery despite the gradual reopening of the economy and the implementation of New Habit Adaptation (AKB).

Source: Kenanga Research - 17 Sept 2020