● Exports’ YoY growth spiked to a 136-month high in May (58.8%; consensus: 57.5%; Apr: 52.0%) above market expectations

• MoM: fell sharply by 10.3% (Apr: 0.7%) to USD16.6b.

● The higher export growth was mainly associated with the low base effect

• Non-O&G (58.3%; Apr: 51.1%): mainly attributable to sharp expansion in mining (98.0%; Apr: 47.0%), and manufacturing (54.0%; Apr: 52.6%) products. By destination, exports of non-O&G to top trading partners moderated but partially supported by base effect, led by China (56.4%; Apr: 78.0%), followed by the US (55.9%; Apr: 56.7%) and Japan (32.6%; Apr: 26.9%).
• O&G (67.0%; Apr: 70.7%): growth moderated and partly due to the base effectled byO&G mining (79.1%; Apr: 86.8%) products and a growth rebound in O&G manufacturing (12.8%; Apr: -10.2%) products.

● Imports rose to a record high (68.7%; consensus: 65.0%; Apr: 29.3%) on low base effect and a growth spike up in O&G (213.6%; Apr: 136.8%)

• By segment, the growth was attributable to higher import of raw materials (79.1%; Apr: 32.3%), followed by consumer goods (50.3%; Apr: 34.1%) and capital goods (35.3%; Apr: 11.8).
• MoM: fell sharply (-12.2%; Apr: -3.5%) to USD14.2b.

● Trade surplus widened to USD2.4b (Apr: USD2.3b), a six-month high and a tad higher than market expectations (consensus: USD2.3b). Meanwhile, total trade
   accelerated to a record high (63.2% YoY; Apr: 40.5%) due to the base effect.

● 2021 export growth forecast remained at 15.1% (2020: -2.6%), but downside risks to persist

• We reiterate our view that the base effect, higher commodity prices and sustain external demand from major trading partners are expected to support Indonesia’s exports growth in the near term. Nonetheless, downside risks remain due to COVID-19 resurgence as Indonesia recorded the biggest daily infections since February on last Sunday.

Source: Kenanga Research - 16 Jun 2021