Indonesia’s trade surplus beats forecast after palm oil exports recover

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JAKARTA (Reuters) – Indonesia posted a bigger-than-expected trade surplus of $5.09 billion in June as palm oil exports jumped after an export ban was lifted a month earlier , while coal shipments to Europe also jumped, official data showed on Friday.

A Reuters poll predicted a surplus of $3.52 billion for June, following a surplus of $2.90 billion in May.

Resource-rich Indonesia is experiencing an export boom thanks to soaring global commodity prices. Its trade surplus in the first half of 2022 was the highest on record at $24.89 billion, more than double that of the same period in 2021.

June exports rose 40.68 percent year on year to $26.09 billion, beating the survey’s growth forecast of 30.26 percent, according to data from Statistics Indonesia.

Palm oil and its derivatives contributed $2.74 billion to total shipments amid high world prices, up more than 860% from last month, with a strong increase in sales to India. India, Pakistan, Bangladesh and China. This is an increase of 89% on an annual basis.

Indonesia banned exports of certain palm oil products for three weeks from the end of April.

Its coal exports to Europe also increased as the effects of the war in Ukraine disrupted the supply of Russian coal to the region. The data showed $191.2 billion in coal exports in the second quarter, up 143% from the same period last year. No monthly data was provided.

Imports rose 21.98 percent year on year to $21 billion, with the biggest increase coming from purchases of raw materials and industrial machinery. The survey predicted growth of 20.10%.

Myrdal Gunarto, economist at Maybank Indonesia, said the surplus should give the central bank confidence to keep interest rates unchanged at next week’s policy meeting as it would provide them with “monetary ammunition” to stabilize the financial markets.

“We believe the era of high commodity prices will continue through the end of the year due to progress in the global economic recovery and continued global geopolitical uncertainty,” he said.

Bank Indonesia, one of the world’s least hawkish central banks, has kept interest rates at pandemic-era record highs. Central banks in Singapore and the Philippines tightened monetary policy in off-cycle moves this week to deal with rising inflation.

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