JAKARTA : Indonesia’s current account deficit widened in 2024 as its merchandise trade surplus shrank amid weaker global demand, the central bank said on Thursday, and analysts pointed to a worsening outlook for global trade this year.
Southeast Asia’s largest economy reported a current account deficit of $8.9 billion for the year, equivalent to 0.6 per cent of GDP, within the central bank’s outlook range of 0.1 per cent to 0.9 per cent, but widening from 2023’s gap of $2 billion, or 0.1 per cent of GDP.
In 2025, the central bank, Bank Indonesia (BI), expects the current account deficit to be in a range of 0.5 per cent to 1.3 per cent of GDP.
However, Indonesia had a $7.2 billion surplus in its balance of payments (BoP) for 2024, larger than 2023’s surplus of $6.3 billion, due to a surplus in the capital and financial accounts on stronger portfolio inflows.
This year, Indonesia’s goods exports will face headwinds from U.S. President Donald Trump’s trade threats, which come amid a potential rise in imports following an Indonesian government drive to stimulate domestic economic growth, said Bank Permata economist Josua Pardede. He predicts the current account deficit will widen to 1.18 per cent of GDP in 2025.
He projected a small deficit in the balance of payments in 2025.
“The BoP deficit may limit room for BI-rate cuts in 2025… underscoring the importance of monetary policy in maintaining Rupiah stability and curbing imported inflation,” said Josua, who projected BI would stand pat until the year-end with a terminal rate at 5.75 per cent.
BI has cut rates twice in the current monetary easing cycle that started in September, but it kept interest rates steady on Wednesday, emphasising its focus on rupiah stabilisation.
In January, Indonesia booked a $3.45 billion merchandise trade surplus, amid surprisingly weak imports, even as exports came in below forecast.
