BI forecasts balance of payment surplus at US$10 billion

Jakarta (ANTARA News) – Bank Indonesia (BI) has forecast that Indonesias balance of payments (NPI) in 2017 will have a surplus of US$10 billion, a decrease from $12 billion in 2016.

“This years surplus will be at around $10 billion, and for 2018, we expect it to remain in surplus but below $10 billion. It will be about $5-7 billion,” BI Senior Deputy Governor Mirza Adityaswara stated here on Friday.

NPI is a statistic that records economic transactions between Indonesians and non-Indonesian citizens. There is a component of the current account balance in the NPI that records the macroeconomic health indicators, as it includes the transactions of goods, services, and primary and secondary income.

In recent years, the NPI continues to record a surplus, after it suffered a deficit of $1 billion in 2015.

According to Adityaswara, the continued surplus of NPI is an indicator of the strength of Indonesias economic fundamentals. The reason being that by the end of 2017 and throughout 2018, the resilience of domestic economists will be hammered by pressure on the return of foreign capital flows from within the country following plans to hike the Feds benchmark interest rate and the Feds declining balance sheet.

“Hence, if Indonesia can maintain its inflation at a low level in 2018, the current account deficit can also be set at below 2.5 percent of the gross domestic product (GDP) in 2018; thus, the increase in interest rates in the US will not have a significant impact,” he noted.

Adityaswara has estimated that this years current account deficit will still be below two percent of the GDP.

In 2018, the current account deficit is expected to increase to below 2.3 percent of the GDP, as despite the export performance showing continued improvement, the rate of imports is also getting tighter along with the need for capital goods to boost the economy, especially for infrastructure development.

As of the third quarter of 2017, Indonesias current account deficit equaled 1.65 percent of the GDP, or $4.3 billion, in the third quarter of 2017, while the NPI recorded a surplus of $5.4 billion.

Source: ANTARA News