Annual growth of Indonesia's exports continues to shrink. The decline in export growth is partly due to the fall in commodity prices and the slowdown in global demand.
By
Hendriyo Widi
·4 minutes read
KOMPAS/TOTOK WIJAYANTO
Trucks line up to fill cargo from ships at Tanjung Priok Port, Jakarta, Monday (1/14/2019). Tanjung Priok Port at least serves 300,000 containers per month.
JAKARTA, KOMPAS — Annual growth of Indonesia's exports continues to shrink, though it still remains the main contributor to the country’s trade surplus. The decline in export growth is partly due to the fall in commodity prices and the slowdown in global demand.
Crude palm oil (CPO), coal, and iron and steel remain the main export commodities. Apparel and accessories exports are still growing and remain among the top 10 export commodities.
According to trade data issued by Statistics Indonesia (BPS) on Thursday (15/12/2022), annual growth of Indonesia’s exports, both oil and gas and non-oil and gas, has been declining since July 2022. Annual export growth, which reached 31.98 percent in July 2022, continued to fall in the following months to reach 5.58 percent in November 2022.
The total value of exports and imports respectively reached US$24.12 billion and $18.96 billion in November. Indonesia recorded a trade surplus of $5.16 billion that month, continuing the surplus trend that has lasted 31 consecutive months. The trade surplus in January-November 2022 amounted to $50.59 billion.
BPS production statistics deputy M. Habibullah said Indonesia's exports were still supported by the three leading commodities of coal, CPO, and iron and steel. However, in November 2022, exports of these superior commodities fell, except for iron and steel.
"The export volume and value of CPO and coal fell due the fall in demand and prices. Meanwhile for iron and steel, even though their export volume dropped, their export value continued to increase, thanks to the rising prices of iron and nickel ore," Habibullah told a hybrid press conference in Jakarta.
KOMPAS/ERWIN EDHI PRASETYA
Production activity of the garment division of PT Sri Rejeki Isman Tbk or Sritex in Sukoharjo, Central Java, Wednesday (13/2/2019). The textile industry still has wide opportunities in the domestic and export markets but faces challenges of efficiency and global competition.
According to BPS data, the export volume and value of CPO in November 2022 amounted to 2.73 million tons and $2.34 billion, respectively. The exports volume and value of coal reached 29.69 million tons and $4.16 billion, respectively. As for iron and steel, their combined export volume and value totaled 1.35 million tons and $2.34 billion, respectively.
BPS also noted seven other commodities that had contributed significantly to exports, which included knitted clothing and clothing accessories. The export value of these commodities grew 29.62 percent on a monthly basis to $370.7 million. Meanwhile, their total export value in January-November 2022 reached $4.35 billion, up 11.33 percent compared to the same period last year.
One of the main markets for garment exports is the United States. Exports of knitted and non-knitted clothing and clothing accessories in November 2022 contributed to Indonesia's trade surplus of $1.31 billion with the US, with knitted clothing and clothing accessories contributing $230.2 million and non-knitted clothing and clothing accessories contributing $219.5 million.
Global trade
The slowdown in Indonesia's exports reflects the general slowdown in global trade.
In its latest report, "Global Trade Update", released on 31 Dec. 2022, the United Nations Trade and Development Conference (UNCTAD) estimated that the value of global trade in goods and services in 2022 would reach $32 trillion. Trade in goods for the year was estimated to grow around 10 percent from last year to $25 trillion.
However, global trade has been declining since the beginning of the third quarter of 2022, and this is expected to worsen until 2023. Geopolitical tensions, high energy prices, rising interest rates and high inflation will continue to hamper global trade growth.
The UNCTAD report also brought good news on global trade. The movement of ships through the world’s ports has started to run smoothly and the cost of container shipments has gradually decreased.
Trade agreements in a number of regions will also prevent global trade from contracting further. Two of these are the Regional Comprehensive Economic Partnership (RCEP) and the African Continental Free Trade Area (AfCFTA).
Meanwhile, Indonesia has strengthened the role of the National Trade Facilitation Committee (KNFP). Trade facilitation is intended to increase global trade through increased transparency and simplified export and import procedures. Through this initiative, the movement and release of goods, including goods in transit, can be accelerated.
KNFP chief executive Susiwijono Moegiarso said in a press statement that the committee needed to be strengthened because the condition of the world economy and global trade were still uncertain. Strengthening the KNFP was also necessary because issues related to trade facilitation were often discussed at a variety of bilateral, regional and multilateral forums.
This article was translated by Hendarsyah Tarmizi.
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