JAKARTA. Falling commodity prices will significantly hurt Indonesia’s export performance, forcing the government to trim its full-year target.
Five commodities — palm oil, coal, rubber, copper and iron ore — saw significant downward trends in the first three quarters of this year, according to statistics compiled by the Trade Ministry.
“As the prices of Indonesia’s main commodities have declined and global economic growth has not picked up well, we’ve revised our export target,” outgoing Trade Minister Muhammad Lutfi told reporters on Friday.
Exports will rise by only 0.9 percent to US$184.3 billion this year rather than the 4.1 percent to $190 billion expected earlier, according to the ministry.
Commodities are key contributors to overall exports in Southeast Asia’s largest economy, making them highly vulnerable to price fluctuation in the global market.
Efforts to process some of these commodities into semi-finished and finished goods, which are more resilient to external price shocks, have been underway, but in terms of volume are still insignificant.
Palm oil prices slumped by 21.70 percent to $726.7 per ton in September from January this year, while rubber prices also plunged by 28.79 percent to $1,588.2 per ton.
In line with this trend, coal prices dropped by 15.46 percent to $66.4 per ton over the same period. In addition, the prices of copper and iron ore fell by 5.75 percent and 35.7 percent to $6,872,2 and $82.4 per ton respectively.
Lower commodity prices had inevitably dragged at the country’s export performance in the first nine months of the year and such a trend could continue to year’s end as the global economy would likely not improve anytime soon, Lutfi said.
The gloomy global outlook is justified by the forecast on worldwide trade released by the World Trade Organization (WTO) at the end of September.
In its prediction, the global trade governing body said that trade in goods might only expand by 3.1 percent this year, much lower than the 4.7 percent it estimated in April.
Such a downgrade is attributed to weaker than expected gross domestic product (GDP) growth and muted import demand recorded in the first half of this year.
“Uneven growth and continuing geopolitical tensions will remain a risk for both trade and output in the second half of this year,” WTO director general Roberto Azevêdo said in a statement.
As a whole, Asia posted the fastest growth compared to any region from January to June, with a 4.2 percent increase on the same period last year.
The institution also slashed its estimate for 2015, with trade to surge by only 4 percent, much less than the 5.3 percent previously predicted, and this will be still lower than the 20-year average of 5.2 percent. (Linda Yulisman)
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