Indonesia: Strong performance of the current account in 2022 – UOB

Economist at UOB Group Enrico Tanuwidjaja reviews the latest results from the current account in Indonesia.

Key Takeaways

“Indonesia’s 4Q22 current account (CA) position recorded another quarter of surplus to the tune of USD4.3bn (or an equivalent of 1.3% of GDP), though slightly lower than 3Q22's USD4.5bn (1.3% of GDP).”

“The capital and financial account recorded a significantly lower deficit of just USD0.4bn (0.1% of GDP), down from USD5.5bn (1.6% of GDP) on the back of stellar FDI inflows into the country and the easing of portfolio capital outflows in 4Q22.”

“Overall, Indonesia recorded an even stronger CA surplus amounting to USD13.2bn in 2022 (1% of GDP), after registering USD3.5bn surplus in 2021 (0.3% of GDP). This comes on the back of more than a decade of persistent deficit amidst strong import demand. Nevertheless, we expect easing commodity prices (though remained steady), possibly higher imports notably due to higher services deficit, and higher primary deficit to turn its CA position into a deficit of circa 0.3% of GDP in 2023.”