JAKARTA: Indonesia’s exports surged in May ahead of a looming decision on threatened hefty US tariffs, data showed on Tuesday (Jul 1), while inflation remained low in June and analysts said there was room for the central bank to cut rates again to support the economy.
Exports rose 9.68 per cent from a year earlier, the statistics bureau said, well above the median forecast of a 0.40 per cent rise in a Reuters poll and outpacing a 4.14 per cent rise in imports.
That saw the trade surplus in Southeast Asia’s largest economy widen to US$4.3 billion in May, up from a five-year low of around US$160 million in April, as exporters wait for the Jul 9 deadline to complete tariff negotiations with the United States.
“There is an effect of anticipation of the imposition of reciprocal tariffs from Trump, so it looks like exporters were frontloading,” said Bank Mandiri economist Shahifa Assajjadiyyah.
Separate data showed the inflation rate was 1.87 per cent in June, a touch stronger than expected but comfortably within Bank Indonesia’s target range of 1.5 per cent to 3.5 per cent. The central bank paused its easing cycle at a policy review last month, but said there was still room to cut rates given moderate inflation and the need to support economic activity.
Maybank Indonesia economist Myrdal Gunarto said the combination of inflation within the target range, a strong trade balance and a stable rupiah meant Bank Indonesia had room to start cutting rates again. Like many other countries, Indonesia is in talks with Washington ahead of next week’s deadline to avoid the US administration’s threatened “reciprocal” tariffs. Jakarta, facing a 32 per cent tariff, has said it will ease import restrictions and rules on many goods and raw materials in a bid to make it easier to do business in the country.
Tuesday’s data showed exports of crude and refined palm oil from January to May were 8.3 million metric tons. Palm oil products and steel were among the key contributors to the rise in exports in May.
Indonesia’s rice output from January to August is estimated at 24.97 million metric tons, up 14.09 per cent compared to the same period last year, the bureau said.
