MACROECONOMICS - JAKARTA. An unexpectedly large slump in imports led Indonesia to book a bigger-than-expected trade surplus in September despite exports remaining weak, data from the statistics bureau showed on Monday.
Southeast Asia's largest economy reported a $3.42 billion trade surplus last month, compared with a Reuters poll expecting a $2.13 billion surplus. The previous month, the resource-rich country had a $3.12 billion surplus.
The widening surplus should help cushion the drop in the rupiah exchange rate against a strong U.S. dollar, and could reaffirm expectations the central bank would stand pat on rates this week, some analysts said.
Indonesia has seen exports declining in recent months due to falling global commodity prices and weakening global trade, including for the nation's top products such as palm oil, coal and nickel.
However, imports have also been falling, resulting in the country's trade surplus sometimes surprising markets on the upside.
Imports were worth $17.34 billion in September, a 12.45% drop from the same month a year earlier, which compared with the poll's prediction of a 5.50% fall and August's 14.77% drop.
The biggest drivers of the decline in imports were falling overseas purchases of food industry waste, which Indonesia typically buys for animal feed, and machinery.
September exports were down 16.17% year-on-year to $20.76 billion, compared with a forecast in a Reuters poll of a 13.5% drop. Exports were down 21.21% in August.
The value of mining product shipments plunged more than 40% annually.
Radhika Rao, an economist at DBS Bank, said despite the higher-than-expected surplus, the global environment remained cloudy, with markets eyeing further U.S. monetary tightening and fresh geopolitical risks from conflict in the Middle East.
"Bank Indonesia is likely to stay on pause, highlighting the evolving global risks, even as domestic inflation and trade outruns are supportive," she said, adding that policymakers might continue with currency intervention.
The central bank is due to hold its monthly meeting on Wednesday and Thursday. It raised interest rates by a total of 225 basis points between August and January and has since kept rates unchanged.