Indonesia records first annual current account surplus in a decade

JAKARTA, Feb 18 (Reuters) – Indonesia booked a present account surplus for the primary time in a decade in 2021, information confirmed on Friday, however its steadiness of funds got here underneath strain within the last quarter as a consequence of bond market outflows, in addition to increased imports and freight prices.

The central financial institution information confirmed Southeast Asia’s largest economic system recorded a $3.3 billion present account surplus for the entire of 2021, equal to 0.3% of gross home product, helped by a increase in commodity costs and robust demand from commerce companions. It was Indonesia’s first such surplus since 2011.

The 2021 steadiness of funds registered a $13.5 billion surplus.

Indonesia’s persistent present account deficits and reliance on overseas portfolio inflows to fund them have been among the many principal contributors to the volatility of the rupiah forex up to now.

Economists have mentioned final yr’s present account surplus ought to assist anchor the forex this yr as main economies put together to tighten international liquidity amid excessive inflation.

Nonetheless, indicators of an acceleration within the U.S. Federal Reserve’s financial tightening plans had already spurred outflows from the bond market, Financial institution Indonesia’s information confirmed, squeezing the capital and monetary accounts within the fourth quarter.

The present account surplus additionally narrowed to $1.42 billion, or 0.4% of GDP, within the fourth quarter, from a $4.97 billion surplus, or 1.7% of GDP, within the earlier three months, on rising imports and freight prices.

The fourth-quarter noticed an $844 million steadiness of funds deficit, in contrast with the July-September quarter’s $10.69 billion surplus.

BI policymakers have mentioned Indonesia will seemingly see its present account swing again to a deficit inside a spread of 1.1% to 1.9% of GDP in 2022, on moderating commodity costs and rising home demand because the financial restoration from the COVID-19 pandemic strengthens.

Reporting by Gayatri Suroyo
Enhancing by Ed Davies

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