Indonesia’s exports in April surprisingly weakened, tipping the country’s trade balance into its largest deficit in nine months and renewing stress on the fragile rupiah.
Recent signs of stability in the nation’s current account deficit and moderating inflation had helped to revive investor confidence ahead of presidential elections next month.
Inflation picked up last month, but largely met forecasts, underlining expectations that Bank Indonesia will likely leave interest rates unchanged in the near term to continue bolstering the economy as growth slows, analysts said.
The G20 economy has kept policy tight and taken steps to dampen imports to shrink the current account deficit, which had ballooned last year and sparked capital outflows.
Indonesia’s trade balance slipped to a US$1.97 billion deficit in April, government data showed yesterday, after two straight months of surpluses, and confounding analysts’ expectations for a US$220 million surplus. The trade deficit was larger in July last year when it was US$2.3 billion.
“We had expected a sharp deterioration in Indonesia’s trade balance over April, but the actual deterioration was truly shocking,” ANZ’s Asia chief economist Glenn Maguire said.
He said export growth remained weak due to softer prices for key commodity and manufactured exports. And firm imports may be due to a combination of lagged foreign exchange effects and foreign direct investment inflows from a buildup in capacity.
“The external position is likely to remain negatively pressured in coming months if our assessment of these dynamics proves true,” Maguire said.
Others attributed imports to an increase in shopping and purchases, as Indonesians prepare for celebrations after the Ramadan fasting month.
Exports in April dropped 3.16 percent against expectations in a Reuters poll of 3.5 percent growth. Imports eased 1.26 percent compared with expectations for a fall of 7.7 percent.
The rupiah hit its weakest in more than three months yesterday, after Indonesia’s unexpectedly large trade deficit. It fell as much as 0.9 percent to 11,775 per US dollar.
“By all measures, Indonesia’s domestic demand remains resilient, and probably more so now that consumers and businesses have adjusted to the rupiah exchange rate,” DBS economist Gundy Cahyadi said.
He said the current account may continue to remain under pressure, although it still looked like the current account deficit could still come in below 3 percent of GDP this year.
Annual inflation last month picked up to 7.32 percent due to higher food costs, but matched forecasts for 7.3 percent, the data showed. On a month-on-month basis, the consumer price index was up 0.16 percent.
Bank Indonesia has maintained its policy rate at 7.5 percent since December last year after increasing it by 175 basis points between June to November to support the rupiah.
Meanwhile, the export outlook may brighten in the coming months as manufacturing activity surged to a record high last month, an HSBC Markit purchasing managers’ index survey showed yesterday.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”