• Exports declined for the tenth straight month (-4.2% YoY; Feb: -9.6%), but the rate of contraction eased
  
  − MoM: rebounded sharply (16.4%; Feb: -6.0%) to a 21-month high, tracking a seasonal trend.
  
  − 1Q24 (-7.2%; 4Q23: -8.3%): remained in a contraction for the fourth straight quarter.

• Weak exports due to lower shipment of non-O&G and O&G products
  
  − Non-O&G (-4.2%; Feb: -10.3%): remained weak, it contracted for the tenth straight month amid a broad-basedslowdown, led by a larger contraction in mining (-19.7%; Feb: -8.2%), followed by slower growth in agriculture (7.8%; Feb: 17.0%) and manufacturing (0.2%; Feb: -11.3%). By destination, shipment to major trading partners remained weak, particularly to China (-16.3%; Feb: -19.3%) and Japan (-4.6%; Feb: -13.6%). However, demand from the US (11.3%; Feb: 9.9%) remained solid, and had partly cushioned the slowdown.
  
  − O&G (-4.0%; Feb: 2.6%): contracted, mainly due to weak mining (-16.6%; Feb: -20.3%) and a sharp slowdown in manufacturing (26.5%; Feb: 68.1%).

• Imports fell sharply (-12.8%; Feb: 15.8%), weighed by lower shipment in non-O&G imports (-16.7%; Feb: 14.4%)
  
  − By category, it was weighed down by weak capital goods (-21.7%; Feb: 18.5%), and raw materials (-12.6%; Feb:12.8%) as well as a sharp moderation in consumer goods (5.0%; Feb: 36.5%).
  
  − MoM: growth contracted (-2.6%; Feb: -0.3%) for the fourth straight month.
  
  − 1Q24 (-0.1%; 4Q23: -1.0%): contracted marginally.

• Trade surplus widened (USD4.5b; Feb: USD0.8b), the highest since February 2023, as MoM exports outpaced imports. However, trade surplus narrowed in 1Q24 (USD7.3b; 4Q23: USD9.2b), lowest since 2Q21
  
  − Meanwhile, total trade fell sharply in March (-8.2% YoY; Feb: 1.3%), the weakest in six months.

• 2024 export forecast maintained at 0.8% (2023: -11.3%) banking on a slight recovery in the external demand
  
  − We continue to expect a slower rebound in Indonesia’s exports, primarily due to slower demand in the agricultureand manufacturing sectors as well as the potential impact of supply disruption amid the El Nino weather pattern. This slower recovery is partly due to China’s lagging economic rebound, though continued demand from advanced economies provides some support. We anticipate that China’s economic revival may boost growth in the 2H24. However, escalating geopolitical tensions could limit these prospects.

Source: Kenanga Research - 23 Apr 2024