● Exports’ YoY growth moderated in June (54.5%; consensus: 49.9%; May: 62.0%) but beating market expectations

• MoM: rebounded by 9.5% (May: -8.4%) to USD18.5b despite rising COVID-19 cases.

● Growth was contributed by expansion in O&G and higher shipment to major trading partners

• Non-O&G (51.3%; May: 61.4%): mainly attributable to mining (93.6%; May: 98.0%), manufacturing (48.9%; May: 54.0%) and expansion in agriculture (17.4%; May: 1.4%) products. By destination, exports of non-O&G to top trading partners broadly expanded led by China (70.2%; May: 58.5%) and Japan (37.6%; May: 34.1%).
• O&G (117.2%; May: 72.7%): growth accelerated due to higher O&G mining (898.1%; May: 133.9%) products.

● Imports slowed (60.1%; consensus: 51.4%; May: 68.7%) due to a slowdown in non-O&G (48.1%; May: 56.4%) but partially supported by strong O&G (239.4%; May: 213.6%)

• By segment, the growth was attributable to higher import of capital goods (43.4%; May: 35.3%) but partially weighed by a slowdown in consumer goods (16.7%; May: 50.4%) and raw materials (72.1%; May: 79.1%).
• MoM: rebounded sharply (21.0%; May: -12.2%) to USD17.1b despite surging COVID-19 cases during the month.

● Trade surplus narrowed to USD1.3b (May: USD2.7b), a twelve-month low and matching market expectations (consensus: USD1.3b). Meanwhile, total trade slowed (57.1% YoY; May: 65.0%).

● 2021 export growth forecast retained at 15.1% (2020: -2.6%), but downside risks remain

• Exports grew by 34.8% YoY in just six months, indicating a rebound in trade activities driven by solid external demand from major trading partners as well as a base effect. Nonetheless, downside risks persist in the near term due to COVID-19 resurgence as Indonesia reported a record high daily case of 54,517 on July 14 brought by the highly transmissible Delta variant.

Source: Kenanga Research - 16 Jul 2021