Indonesia's Current Account Deficit Widens to 1.96 Percent of GDP

Jakarta  (Antara Jatim) - Bank Indonesia said the country's current account deficit widened to US$5 billion  or 1.96 percent of its Gross Domestic Products (GDP) in the second quarter of this year from 0.98 percent or US$2.4 billion in the previous quarter.

"The deficit widened  as a result of a decline in the country's surplus in the trade of non oil/gas commodities  and widening deficit in the primary income and service account,"  Executive Director of  the Central Bank's Communications Department Agusman said here on Friday.

However, year-on-year, the current account deficit was 27 basis points smaller. In the second quarter of 2016, the  current account deficit was US$5.2 billion.

Earlier Bank Indonesia Governor Agus Martowardojo said in the second quarter of 2017, export did slow down  especially exports of commodities other than oil and gas.

The Central Bank's statistics showed that amid the slump that hit exports of non-oil/gas commodities to only US$35.3 billion  in the second quarter of 2017  from US$36.4 billion in the previous quarter,  imports of non-oil/gas commodities  on the contrary increased  to US$29.3 billion  from US$28.8 billion including industrial basic materials and consumer goods. Surplus in the trade of non-oil/gas commodities, therefore, shrank in the second quarter of this year. Growing demand during the Islamic fasting month of Ramadhan also contributed to the decline in the surplus .

At the same time, deficit in the service account  widened to US$2.3 billion on shrinking surplus in tourist service  and widening deficit in primary income account  as a result of growing dividend payments in line with seasonal pattern. Deficit in primary income account increased to US$8.9 billion from US$7.7 billion in the first quarter.

Meanwhile, the widening  in the current account deficit was curbed by a decline in the deficit  in the trade balance of non-oil/gas commodities  to US$1.5 billion  from US$2.1 billion in the first quarter to follow the shrinking price  and imports of oil.

The current account is an important indicator about an economy's health. It is defined as the sum of the balance of trade (goods and services exports less imports), net income from abroad and net current transfers.

Amid the deficit in current account balance, Indonesia  recorded a surplus of US$5.9 billion in capital and financial account on surplus in direct investment and portfolio investment.

With the surplus in capital and financial account exceeding the deficit in current account , the country's balance of payments  left a surplus of  US$700  million in the second quarter of 2017.

"Altogether, development of the country's balance of payments showed that the economic external balance has been well maintained that would contribute to sustaining macro economic stability. The central Bank remains watchful of global developments especially about the policy of the U.S. Central Bank and geopolitics that could have negative impact on the country's balance of payments," Agusman said.(*)