JAKARTA: Indonesia’s exports again exceeded imports last month, but the country’s trade surplus would have been significantly higher had it not been for the increase in oil imports over the past year.

Interim Statistics Indonesia (BPS) head Amalia Adininggar Widyasanti said on Monday that June marked the “50th consecutive month” of surplus trade as exports worth US$20.84bil surpassed US$18.45bil of imports.

While that made for a positive trade balance, the surplus of US$2.39bil was the lowest in four months.

A 19% monthly increase in oil imports that ate into Indonesia’s trade surplus in June.

The value of oil imports last month was up 47% year-on-year on the back of higher volumes and prices.

When excluding oil and gas products, the trade surplus would have increased in June compared to the preceding month.

The country imported US$3.27bil worth of oil and oil derivatives in June, higher than US$2.75bil in the preceding month and US$2.22bil in June last year.

The monthly increase was due to a 36.6% surge in import volumes, while the annual rise was mostly attributable to higher prices.

The price for Brent crude oil leaped from an average of near US$75 per barrel in June 2023 to US$85 last month.

BCA chief economist David Sumual said that the shortfall in oil lifting forced the country to import 21.3% more oil in the first half of 2024 than in the same period last year.

However, he said that oil imports tended to “fluctuate with the restocking schedule of state-owned oil company Pertamina”.

He also noted that the June figure might have been impacted by a base effect, given that oil imports in May and June of last year “were low”.

Hosianna Evalita Situmorang, an economist at private lender Bank Danamon, said that June’s monthly oil imports jump was partly attributable to a seasonal effect due to the school holidays driving mobility and hence petrol demand.

Manufacturing was unlikely to have contributed to higher oil demand, she added, given the lacklustre activity in the sector as reflected by the nosediving purchasing manager’s index (PMI) in June.

Published by S&P Global in early July and based on a survey of purchasing executives from around 400 manufacturing companies to determine business conditions, the country’s PMI fell to 50.7 in June, the lowest reading since May 2023.

“Imports of raw materials and capital goods also went down,” said Hosianna, pointing to the two trade components seen as an indicator of the vigour of the manufacturing industry.

China remained the archipelago’s largest trading partner in June, with Indonesian exports and imports amounting to US$4.65bil and US$5.34bil, respectively.

In the first half of the year, Indonesia imported goods totaling US$32.45bil from China, up from US$29.98bil in the same period last year.

Exports to China in the first half, meanwhile, dropped to US27.02bil from US$29.93bil in the first half of 2023.

China’s annual gross domestic product growth slowed to 4.7% in the second quarter from 5.3% in the previous three months.

Despite the slowdown, BPS’s Amalia noted that Indonesian exports to China grew by 2.63% in the second quarter compared with the preceding quarter.

BCA’s David said the export growth was thanks to China’s expanding PMI as well as a “price rally of industrial minerals”, which touched 13.1% year-to-date.

“However, we cannot expect similar conditions to play out in the second half of 2024.

“The industrial minerals price index has gone down by 11.61% from its peak, and China’s mineral inventories are overflowing, which would press down mineral import demand from China,” said David.

He went on to add that China’s manufacturing sector was facing a slowdown as global demand waned and Western tariffs added insult to injury.

This would decrease Chinese mineral and raw material imports, “so Indonesia’s exports to China in the second half will likely not be as good as in the first half.”

Indonesia’s exports to the United States rose to US$12.19bil in the first half from US$11.4bil in the first six months of 2023

 - ANN