Societe Generale\u2019s Kunal Kundu analyzes Indonesia\u2019s May 2026 trade data, highlighting the first deficit since the pandemic and a record Oil and Gas shortfall. He notes weaker exports, strong imports and a narrowing external cushion, but also stresses that cumulative exports and downstream Nickel-related shipments remain supportive, leaving open whether this marks a temporary interruption or a more persistent deterioration.<\/p>\n
Deficit tests external resilience narrative<\/p>\n
“This suggests that part of the import strength may reflect ongoing industrial production, investment activity, and downstreaming efforts. The critical question is whether subsequent economic activity validates that interpretation.”<\/p>\n
“If global commodity prices weaken further, or if demand from major destinations such as China, the US, and India softens, Indonesia\u2019s non-oil and gas surplus could come under additional strain. The concern is therefore not merely the May deficit itself, but whether it signals a narrowing margin of safety in the broader trade account.”<\/p>\n
“The key question for the coming months is whether May proves to be a temporary interruption in Indonesia\u2019s surplus trend or the beginning of a more persistent deterioration. If energy imports stay elevated while major commodity exports fail to recover, the trade balance could become a more material macro risk.”<\/p>\n
“But if downstream exports continue to scale and capital-goods imports translate into future productive capacity, the May deficit may ultimately be seen as a manageable cost of economic transformation rather than a sign of lasting external weakness.”<\/p>\n
“Indonesia\u2019s May 2026 trade data mark an important inflection point for the external sector. The country recorded a $1.61 bn trade deficit, reversing from a $89 mn surplus in April and ending a 72-month run of monthly trade surpluses that had been in place since May 2020.”<\/p>\n