● Exports expanded sharply in January (16.4% YoY; Dec 22: 6.6%) above the consensus forecast (12.5%)

- MoM: fell (-6.4%; Dec 22: -1.1%) plunged for the fifth straight month, reflecting a slowing trend amid weak commodity prices and subdued external demand.

● Growth was attributable to lower base effect and expansion in O&G and non-O&G products

- Non-O&G (14.0%; Dec 22: 5.0%): growth expanded mainly due to the lower base effect recorded last year and supported by expansion in mining (121.5%; Dec 22: 45.0%) products. By destination, growth was contributed by higher shipment to China (49.4%; Dec 22: 13.4%) and Japan (24.8%; Dec 22: 22.5%), and also partly due to a lower base effect.

- O&G (65.0%; Dec 22: 37.9%): expanded sharply, led by higher shipment of manufacturing (114.3%; Dec 22: 71.8%) and mining (45.6%; Dec 22: 30.8%) products.

● Imports rebounded in January (1.3%; Dec 22: -7.0%) due to a lower base effect, but slightly lower than market expectation (consensus: 1.5%) due to a weak import of non-O&G (-2.8%; Dec 22: -7.3%) products

- By category, growth was led by capital goods (5.7%; Dec 22: 12.2%), followed by consumer goods (1.1%; Dec 22: - 27.5%) and raw materials (0.4%; Dec 22: -7.7%).

- MoM: growth fell (-7.1%; Dec 22: 4.8%) to a four-month low.

● Trade surplus edged down slightly (USD3.87b; Dec 22: USD3.89b) but above market expectations (consensus: USD3.35b). Meanwhile, total trade expanded (9.0% YoY; Dec 22: 0.0%) due to the base effect.

● 2023 export growth forecast retained at 2.5% (2022: 26.1%)

- Growth is expected to moderate in the coming months due to the waning effect of a lower base coupled with weak commodity prices and subdued external demand. Nevertheless, we see some upside bias to the growth outlook as China's economic reopening may support Indonesia's exports going forward.

Source: Kenanga Research - 16 Feb 2023