Indonesia booked a higher current account surplus in the second quarter this year thanks to strong commodities exports performance, providing the country with much-needed support to maintain its external resilience amid slowing down global economic prospects and soaring inflation.
The country’s current account surplus, which records goods and service trade as well as overseas revenues and remittances, rose to $3.9 billion in the April to June period, or 1.1 percent of its gross domestic product (GDP), Bank Indonesia, the country central bank, said in a statement Friday.
The balance was up from a revised $0.4 billion, or 0.1 percent of GDP, in January to March period.
“The current account performance was mainly supported by an increase in the non-oil and gas trade balance surplus in line with persistently high global commodity prices,” Erwin Haryono, the executive director and head of communications department at Bank Indonesia, the country central bank, said in the statement.
Erwin noted the windfall revenue from commodities export were still enough to cover deficits in oil and gas trade amid rising domestic fuel demand and soaring global energy prices. Also, the commodities proceeds covered services imports and payments on investment returns from Indonesia in the second quarter.
On the other hand, the capital and financial account deficit were still in deficit, albeit narrowing, in the second quarter. The account, which records cross border financial assets exchange and direct investments, was at a $1.1 billion deficit, or 0.3 percent of GDP, in the second quarter, compared to 2.1 billion, or 0.7 percent of GDP) in the first quarter.
Erwin said a net inflow of $3.1 billion direct investment in the period and a smaller net outflow in the portfolio investment supported the capital and financial account performance.
It reflected “investor optimism regarding the prospects for economic recovery and a well-maintained domestic investment climate,” he said.
With a surplus in the current account and a narrowing deficit in the capital and financial account, Indonesia saw its balance of payment surplus return to $2.4 billion surpluses in the second quarter, after a deficit of $ 1.8 billion a quarter earlier.
“With these developments, the position of foreign exchange reserves at the end of June 2022 reached $136.4 billion, equivalent to 6.4 months of import financing and government foreign debt payments, and was above international adequacy standards,” Erwin said.