Indonesian trade recovers as 2013 inflation hits 8.38 per cent

Indonesian trade recovers as 2013 inflation hits 8.38 per cent
Tanjong Priok, Indonesia’s busiest port.

JAKARTA- Indonesia posted a robust trade surplus in November, data showed Thursday, in a sign of recovery in Southeast Asia's biggest nation that was plunged into economic turmoil in 2013.

Jakarta will welcome the news as it battles a deep current account deficit and poor trade performance, soaring inflation and a slump in the rupiah's value.

The November trade surplus of $776.8 million, up from October's modest $24.3 million surplus, is the country's highest since April 2012, and marks a major upswing since a record deficit of $657.2 million in September.

Central Statistics Agency chief Suryamin, who goes by one name, said the recovery came thanks to an improvement in countries buying Indonesian exports, while the weak rupiah also made goods cheaper abroad.

But the overall trade balance for January to November 2013 is still in a substantial deficit of $5.6 billion.

Manufacturing also improved, according to HSBC's purchasing managers' index, which rose to 50.9 in December from 50.3 in November, showing a rise in domestic demand. A reading above 50 indicates expansion.

Prices in 2013 rose 8.38 per cent on-year in December, up slightly from 8.37 per cent in November.

But inflation was almost double the 2012 rate of 4.30 per cent and well above the central bank's usual target range of 3.50-5.50 per cent.

"Inflation was a result of an increase in food prices during Christmas and New Year, higher cooking gas prices and distribution costs brought about by a hike in the fuel price," Suryamin said.

The rupiah lost 20 per cent of its value against the US dollar in 2013 and is considered one of Asia's most vulnerable currencies, pushed down by Indonesia's current account deficit, which sat at 3.8 per cent of GDP in the third quarter.

The government and central bank have moved to shore up the economy in recent months, especially as the US Federal Reserve scales back its monetary stimulus programme, which has led to an outflow of cash back to the West.

Indonesia has enjoyed a prolonged boom in recent years, clocking up annual growth of more than six per cent, but analysts predict 2013 growth figures will be at the lowest in four years.

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