Fixing the Trade Deficit Problem

The combination of a slump in exports and a surge in imports has once again caused a deficit in Indonesia’s trade balance. The global trend of protectionism and a surge in the import consumer goods are in the spotlight.

KOMPAS/NINA SUSILO

Technicians assemble truck parts on Thursday (12/12/2019) at Isuzu’s Karawang plant at the Suryacipta Industrial Estate in East Karawang, West Java. Isuzu has started exporting its medium-sized truck model, Traga, to the Philippines and expects to expand its exports to 20 other countries over the next three years.

The trade deficit of US$1.11 billion recorded in November brings the total deficit over the first 11 months of 2019 to $3.105 billion. The huge deficit in November (the second largest after the $2.29 billion recorded in April) was triggered by a sharp decline in exports in almost all sectors (except agriculture) and a surge in imports, both of capital goods/raw materials and consumer goods.

The slowdown in the world economy, which has caused a decline in demand and a fall in commodity prices, as well as the growing trend of global protectionism, are the main triggers of the fall in exports.