Against a backdrop of elevated global uncertainty (looming economic recessions in the West, global stagflation, Russian-Ukrainian war and rising interest rates) and domestic turmoil (rising inflation due to rising prices of major subsidized fuels as of September 3, 2022, the Bank of Indonesia’s higher benchmark interest rate and the low rupiah rate which makes imports more expensive), there is a good chance of seeing a drop in demand international market for Indonesian export items (especially raw materials) as well as a decline in domestic demand for imports from abroad.
This would present a stark contrast as over the past year (or so), Indonesia’s export and import performance has been very strong thanks to high international commodity prices and the (economic) rebound of the COVID-19 crisis.
So, with the October 2022 data in hand, can we now confirm if we are witnessing a tipping point, or if the weak September data was part of a seasonal phenomenon?
Well, it’s still too early to draw a definitive conclusion. However, there is at least one noticeable difference this year that could indicate a tipping point.
In September 2021, we also saw a decline in exports from Indonesia compared to the previous month. Table 1 (below) shows that Indonesia exported a total of US$20.6 billion in September 2021, less than US$21.4 billion in August 2021. The following month, however, the Indonesian exports rebounded to US$22.0 billion (as of October 2021). This seems to be a seasonal trend because if we look at the data from 2018 and 2019 (the 2020 data was too skewed by the COVID-19 crisis, and therefore unusable), then we see the same trend (namely: a decline in September exports from August, but followed by a strong rebound in October).
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