Indonesia suffers USD6.9bn current account deficit

Bank of Indonesia had announced measures to counter this, but it looks like these are unlikely to be highly effective.

According to Nomura, the overall balance of payments deficit widened further in Q2 as a result of a large USD6.9bn current account deficit, which overshadowed an improved capital account surplus of USD5.5bn.

Here's more from Nomura:

We revise our current account forecast to 2.2% of GDP from 0.1% for 2012, driven by the still-weak external environment. We also believe the necessary policy tightening to cool domestic demand is unlikely to happen soon.

Measures announced by Bank Indonesia (BI) and the government are steps in the right direction but are unlikely to be highly effective. The current account deficit widened to USD6.9bn (3.1% of GDP) in Q2 from a revised USD3.2bn (1.5% of GDP) in Q1, the third consecutive quarterly deficit. This reflects the monthly trade data that indicated that the merchandise trade balance swung to a deficit of USD2.3bn in Q2 from a surplus of USD2.8bn in Q1.

Within the trade balance, the non-oil and gas trade surplus narrowed sharply to USD2.2bn from USD4.7bn in Q1 on strong domestic demand, while the oil and gas balance remained in a deficit on soft commodity prices. The services and the income deficits widened to USD2.9bn and USD6.5bn respectively in Q2, from USD2.1bn and USD5.9bn in Q1 on higher imports of transportation services and net negative tourism receipts.

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