JAKARTA: Indonesia’s trade deficit unexpectedly hit a record high in July, data showed yesterday, adding further pressure on policy makers to shore up the economy as investors flee the country as it faces an increasingly grim future.
The news came as a closely watched survey showed manufacturing activity in Southeast Asia’s biggest economy had sunk to a 15-month low in August. Indonesia has been hammered by huge outflows of foreign cash over the past month on expectations the US Federal Reserve will begin to wind down its stimulus programme.
Official figures showed Indonesia’s trade deficit rose sharply to $2.31bn in July from $847m in June, compared with economists’ forecasts that it would dip to $353m. The deficit in July was “the highest in Indonesia’s history”, Suryamin, the head of the Central Statistics Agency who goes by one name, told reporters.
“Exports dropped because the price of commodities dropped,” Suryamin said. Demand for key commodities, such as coal and palm oil, have been hit by a slowdown in key market China.
It adds pressure to the country’s current account, which in the April-June quarter widened to a $9.8bn deficit, the biggest shortfall since the Asian financial crisis of the late 1990s.
Adding to the government’s woes was news that an index compiled for HSBC showed manufacturing activity fell to a 15-month low in August and was now shrinking. The purchasing managers index hit 48.5 last month from 50.7 in July, marking the fourth straight month of decline, Anything below 50 points to contraction and anything above indicates growth.
Equally as worrying, the survey showed new exports business contracted for the third month in a row, while a decline in total new orders was the first recorded since May 2012, HSBC said.
Shares on Jakarta’s stock market tumbled almost three percent as investors fled to safety after the data was released, while the rupiah remained under pressure, having already lost about 12 percent against the dollar this year. AFP
