Indonesia exports further slumps 16.4%

To make matters worse, trade deficit widens to a whopping $1.3bn.

According to Bank of America Merrill Lynch, exports contracted 16.4% in June from a year ago, worsening from a contraction of 8% (revised from -8.6%) in May. Oil & gas exports declined 22.3% yoy (vs. -8.5% in May) as gas (-27.3%), crude oil (-16.3%) and oil products (-6.9%) all contracted.

Here's more from BofAML:

On a mom basis, mineral ores exports declined a sharp -54.6%, while and mineral fuel exports contracted -13.4%. Import growth moderated, rising +10.7% in June (below consensus) from +14.9% in May. Trade balance remains in deficit for the third consecutive month, swelling to US$1.32bn in June – the widest on record - from US$207mn (revised from US$486mn) in May.

Europe’s deepening crisis and slower US and China growth are hurting exports. Non-oil exports to EU fell 12.1%, while that to China contracted 15.4%. Indonesia Vice Minister of Trade Bayu Krisnamurthi has said that Indonesia would accept“little or no export growth this year” due to risks from Europe. Indonesia’s recently implemented 20% export tax on 65 selected mineral commodities may have also hurt mineral ore exports. Falling commodity prices in June, including coal (-5.6%) and crude oil (-10.3%), also contributed to the plunge in exports.

Indonesia’s external accounts have deteriorated rapidly as the terms of trade worsen and global commodity demand softens. The trade balance has swung to an estimated deficit of $2.3bn (1% of GDP) in 2Q, from a $2.8bn surplus (1.3% of GDP) in the first quarter. This would widen the current account deficit to about 3% of GDP, by our estimates, a significant jump from the 1.3% deficit in 1Q. The worsening external balances may hurt the rupiah, which has depreciated some 4.4% since January.