Indonesia’s export growth expanded sharply in June to 40.7% YoY and in May: 27.0%, this is a two-month high and far above market expectations of 30.3%.
Month on Month growth rebounded sharply (21.3%; May: -21.3%), bringing export value to USD26.1b. The expansion was mainly due to higher shipment of non-O&G products, which contributed to a 94.1% share of total exports. Non-O&G (41.9%; May: 25.4%): expanded due to a sharp expansion in the export of manufacturing products (29.7%; May: 7.8%) and supported by sustained expansion in mining (103.6%; May: 114.2%) and agriculture (12.4%; May: 21.4%) products.
By destination, export of non-O&G to major trading partners was relatively sustained but grew at a slower pace compared to the previous month due to base effect, led by Japan (38.4%; May: 46.9%), followed by China (23.2%; May: 30.9%) and the US (15.5%; May: 16.6%).
O&G (23.7%; May: 54.5%): growth slowed sharply due to weak shipment of mining (4.7%; May: 18.7%) and
manufacturing (124.7%; May: 307.5%) products. Imports slowed (22.0%; May: 30.7%), but slightly higher than market expectations (consensus: 20.1%). The moderation in growth was mainly due to a weak expansion in import of non-O&G (16.2%; May: 25.3%) products
In terms of category, it was a broad-based moderation, led by raw materials (24.6%; May: 33.9%), followed by capital
goods (20.8%; May: 29.2%) and consumer goods (3.3%; May: 7.8%). MoM: rebounded sharply (12.9%; May: -5.8%) to USD21.0b, a three-month high in value term. Trade surplus expanded (USD5.1b; May: USD2.9b), a two-month high, beating market expectations (consensus: USD3.5b). Similarly, total trade also expanded (31.7% YoY; May: 28.7%).
Exports forecast retained at 28.6% (2021: 41.9%) backed by elevated commodity prices. Export growth is expected to remain on a positive momentum largely due to the base effect and further supported by higher commodity prices. Nonetheless, Kenanga still expects growth to moderate in the 2H22 as the base effect dissipates while also may be weighed by the impact of the global growth slowdown.
by Kenanga Investment Bank- Economic View Point
