MARKET DEVELOPMENT
RI Braces for Dim Export Outlook
RI Braces for Dim Export Outlook
05/08/2013 (Jakarta Post) - Indonesia is bracing for a gloomy trade outlook until the end of this year as non oil and gas exports will likely remain stagnant due to weak demand from most of its key trading partners.
Trade Minister Gita Wirjawan said on Friday that despite posting a surplus of US$2.51 billion in the first half of the year, the country’s non oil and gas trade balance might be under heavy pressure because the demand from traditional export destinations, which absorbed more than 70 percent of its overseas shipments, would remain weak.
“The global economic outlook has showed no significant improvement. The deceleration continues in large economies in Asia such as Japan and China, which are our main trading partners,” Gita told reporters in a press briefing in Jakarta.
From January to June, exports declined by 2.63 percent to $74.77 billion, driven mostly by exports to traditional destinations, while imports dropped by 3.67 percent to $72.26 billion on the back of shrinking imports of capital goods. This resulted in a surplus of $2.51 billion during the first semester, a mild gain from $1.78 billion a year earlier.
By geography, non-oil and gas exports to the majority of key markets have slipped. Shipments to South Korea, which represented 6.4 percent of total exports in the semester, dipped the deepest, plunging by 34.2 percent to $5.83 billion.
This was followed by a 11.5 percent decline in exports to Japan to $14.11 billion, which accounted for 15.5 percent of exports, and a 11 percent drop in shipments to $2.82 billion to Taiwan.
Despite the potential considerable increase in the volume of exports, it would not help boost exports, as prices of commodities, which made up the biggest part of the current export structure, might dive further, Gita continued.
During the first semester, the volume of non-oil and gas exports, including coal, palm oil, rubber and nickel, rose markedly by 17.8 percent to 343.59 million tons, but its value dropped by 2.6 percent to $74.77 billion.
Coal exports, for instance, climbed by 17.4 percent to 217.13 million tons in terms of volume, but the value only declined by 7 percent to $12.97 billion. Similarly, palm oil exports also surged by 28.4 percent to 12.60 million tons with the value dropping by 6.1 percent to $9.62 billion.
To compensate for this setback, Gita said that the government would encourage shipments of more value-added products, such as vehicles and automotive components, to new markets, such as South America, the Middle East and Africa.
Latif Adam, an economist from the Indonesian Institute of Sciences (LIPI), shared a more optimistic view, saying that several factors, including recent depreciation of the local currency and brighter growth prospect in Indonesia’s two major trading partners – the United States and Japan – offered a more positive outlook on trade in the second semester of this year.
“The depreciation of the rupiah will add a competitive edge and significantly boost our exports ,” he said, adding that higher growth in the US and China would open doors for stronger demand for Indonesia’s manufactured goods.
Trade Minister Gita Wirjawan said on Friday that despite posting a surplus of US$2.51 billion in the first half of the year, the country’s non oil and gas trade balance might be under heavy pressure because the demand from traditional export destinations, which absorbed more than 70 percent of its overseas shipments, would remain weak.
“The global economic outlook has showed no significant improvement. The deceleration continues in large economies in Asia such as Japan and China, which are our main trading partners,” Gita told reporters in a press briefing in Jakarta.
From January to June, exports declined by 2.63 percent to $74.77 billion, driven mostly by exports to traditional destinations, while imports dropped by 3.67 percent to $72.26 billion on the back of shrinking imports of capital goods. This resulted in a surplus of $2.51 billion during the first semester, a mild gain from $1.78 billion a year earlier.
By geography, non-oil and gas exports to the majority of key markets have slipped. Shipments to South Korea, which represented 6.4 percent of total exports in the semester, dipped the deepest, plunging by 34.2 percent to $5.83 billion.
This was followed by a 11.5 percent decline in exports to Japan to $14.11 billion, which accounted for 15.5 percent of exports, and a 11 percent drop in shipments to $2.82 billion to Taiwan.
Despite the potential considerable increase in the volume of exports, it would not help boost exports, as prices of commodities, which made up the biggest part of the current export structure, might dive further, Gita continued.
During the first semester, the volume of non-oil and gas exports, including coal, palm oil, rubber and nickel, rose markedly by 17.8 percent to 343.59 million tons, but its value dropped by 2.6 percent to $74.77 billion.
Coal exports, for instance, climbed by 17.4 percent to 217.13 million tons in terms of volume, but the value only declined by 7 percent to $12.97 billion. Similarly, palm oil exports also surged by 28.4 percent to 12.60 million tons with the value dropping by 6.1 percent to $9.62 billion.
To compensate for this setback, Gita said that the government would encourage shipments of more value-added products, such as vehicles and automotive components, to new markets, such as South America, the Middle East and Africa.
Latif Adam, an economist from the Indonesian Institute of Sciences (LIPI), shared a more optimistic view, saying that several factors, including recent depreciation of the local currency and brighter growth prospect in Indonesia’s two major trading partners – the United States and Japan – offered a more positive outlook on trade in the second semester of this year.
“The depreciation of the rupiah will add a competitive edge and significantly boost our exports ,” he said, adding that higher growth in the US and China would open doors for stronger demand for Indonesia’s manufactured goods.