Indonesia's exports and imports both declined in January 2012 on a month-over-month basis but still grew compared to January 2011. Exports fell 9.3% while imports dropped 11.6% in January 2012. Japan was Indonesia's largest export partner for non-oil and gas products, while China's share of imports was the highest. The report forecasts slightly lower exports and imports in February 2012 but a wider trade balance.

1. TRADE OUTLOOK
MONTHLY REPORT
∂Ri/1059/to/2012
March 2012
∂Ri
D A N A R E K S A R E S E A R C H I N S T I T U T E
q Exports and imports both posted weak figures at the beginning of
2012. While exports contracted 9.3 percent MoM to US$ 15.5 bn in
January 2012, imports slumped 11.6 percent MoM to US$ 14.6 bn.
However, compared to January 2011, Indonesia’s exports and imports
still grew by 6.1 percent and 16 percent, respectively, resulting in a
wider trade balance of US$923.4 mn.
q In January 2012, Japan was Indonesia’s largest trading partner in
terms of Indonesia’s exports. In this month, Indonesia’s non oil and
gas exports to Japan reached US$ 1.6 bn (a 12.8 percent share of
Indonesia’s non oil and gas exports), followed by China (US$ 1.4 bn or
a 10.8 percent share), and the US (US$ 1.2 bn or a 9.6 percent share).
On the imports side, China’s share of Indonesia’s non oil and gas
imports reached 21.8 percent, or far higher than Japan’s 15.0 percent
and Singapore’s 7.3 percent.
q All in all, we predict Indonesia’s exports to reach US$ 15.4 bn in
February 2012, or slightly lower than January’s US$ 15.5 bn. As for
imports, we expect them to dip to US$ 14.3 bn from US$ 14.6 bn in
January. As a result, Indonesia’s trade balance is expected to widen to
US$ 1.04 bn in February 2012.
A Slow Start to the Year
MoM Slowing Exports
Forecast for February 2012
Exports US$ 15.4 bn
Imports US$ 14.3 bn
Trade Balance US$ 1.1 bn
Forecast for 2012
Exports US$ 229.4 bn
Imports US$ 200.3 bn
Trade Balance US$ 29.1 bn
Source: BPS
PURBAYA YUDHI SADEWA, Ph.D.
Head of Economic Research
(62-21) 350 9777 ext 3600
yudhi@danareksa.com
DAMHURI NASUTION
Senior Econometrician
(62-21) 350 9777 ext 3602
damhuri@danareksa.com
HANDRI THIONO
Economist
(62-21) 350 9777 ext 3606
handrit@danareksa.com
www.danareksa-research.com
15.5
14.6
0
2
4
6
8
10
12
14
16
18
20
Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12
US$ Bn
(500)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Trade Balance (RHS)-US$ Mn
Total Export
Total Import

2. TRADE OUTLOOK
2∂Ri DANAREKSA RESEARCH INSTITUTE
January Exports: Down 9.3 percent MoM
After slipping 0.9 percent in December 2011, Indonesia’s exports dropped 9.3 percent MoM in January 2012. Lower
exports of oil and gas products (down by 14.7 percent) and lower exports of non oil and gas products (down by 7.9
percent) both contributed to the lower exports in January. Exports of mineral fuels (HS 27) and rubber products and
articles thereof (HS 40) saw the biggest declines among the non oil and gas exports. On a YoY basis, however, exports
were still up 6.1 percent.
In January 2012, Japan was the main destination for Indonesia’s non oil and gas exports. Indonesia’s exports to Japan
reached US$ 1.6 bn, or a 12.8 percent share of the total non oil and gas exports, followed by China and the US with
10.9 percent and 9.6 percent shares, respectively.
2011 Full-year Exports
Source: BPS, Danareksa Research Institute
January Imports: Down 11.6 Percent MoM
Like exports, Indonesia’s imports also fell in January 2012. In this period, they dropped 11.6 percent MoM to US$ 14.6
bn. This decline owed to an 18 percent drop in oil and gas imports and a 9.7 percent fall in non oil and gas imports.
Among the non oil and gas products, the imports of mechanical machinery and equipment (HS 84) and electrical
machinery and equipment (HS 84) booked the largest declines in January 2012.
Indonesia’s non oil and gas imports from China reached US$ 2.5 bn, or a 21.9 percent share, followed by Japan’s 15.1
percent share and Singapore’s 7.3 percent share.
4.9 4.1 5.0 5.0 6.1 7.6 8.3 11.2 7.3 11.6 14.6 15.5
229.4
0.0
50.0
100.0
150.0
200.0
250.0
Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
US$ Bn
Jan-Jan Jan-Dec

3. TRADE OUTLOOK
3∂Ri DANAREKSA RESEARCH INSTITUTE
2011 Full-year Imports
Source: BPS, Danareksa Research Institute
Imports of raw materials and capital goods contracted by 9.6 percent MoM and 21.3 percent MoM, respectively, in
January 2012 although imports of consumer goods actually rose by 1.1 percent MoM. On a YoY basis, imports of raw
materials and consumer goods still grew but at slower growth rates of 11.2 percent and 8.7 percent, respectively.
Imports of capital goods still grew strongly by 41.3 percent YoY.
Both exports and imports growth slowed in January 2012. Exports growth slowed from 26 percent YoY to 6.1 percent
YoY, while imports growth slowed from 32.3 percent to 16 percent. Hence, compared to January 2011, Indonesia’s trade
balance slumped 54.9 percent to US$ 923.4 mn.
Slowing YoY Growth of Imports
Source: BPS
2.9 2.1 2.7 3.3 4.1 4.4 5.3 9.6 6.6 9.5 12.6 14.6
200.3
0.0
50.0
100.0
150.0
200.0
250.0
Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
US$ Bn
Jan-Jan Jan-Dec
(60)
(40)
(20)
0
20
40
60
80
100
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12
(%YoY)
Consumer Goods
Raw Materials
Capital Goods

4. TRADE OUTLOOK
4∂Ri DANAREKSA RESEARCH INSTITUTE
Trade Outlook: Slowing Growth
We project slowing exports growth in 2012 since the weaker global economy may mean softer demand for Indonesian
goods. In particular, the outlook for China, one of Indonesia’s main trading partners, looks less bright given the
downturn in the eurozone economy.
In March, the Chinese government lowered its 2012 GDP growth forecast to 7.5 percent to take into account the impact
of the eurozone recession. At the same time, China set an inflation target of around 4 percent. Yet despite the lower
growth forecast, China still hopes to further expand its domestic demand as it continues to develop its real economy.
It should be appreciated that the anticipated slowdown in the Chinese economy is also a consequence of China’s
contractionary policy to curb its rising inflation. Hence, there exists the possibility that the PBOC reverses its monetary
policy in the near term and injects liquidity into its banking system. China has, for example, reduced the amount of funds
that major commercial banks must keep in the central bank reserves to 20.5 percent from 21 percent previously. Such
a policy will give a boost to the economy.
China’s manufacturing activity is weakening. This can be seen in the decline in the purchasing managers index to 48.1
in March 2012 from 49.6 the previous month. As such, Chinese demand for Indonesia’s raw materials could weaken
- at least in the near term. All in all, China is likely to remain as Indonesia’s major trading partner even if demand for
Indonesian goods slows in the coming months.
Meanwhile, Japan’s CEI and LEI continue to signal improvements in the Japanese economy. In January 2012, the CEI
declined by 0.3 percent MoM to 92.7 but the LEI, by contrast, rose 1.2 percent MoM to 94.4, its third straight monthly
increase. As such, the Japanese economy appears stable with a brighter outlook. Against such a backdrop, we expect
that Japanese demand for Indonesian products will remain relatively strong going forward.
The US economy has encouragingly showed significant improvements lately. Besides better employment data, the CEI
and LEI are both increasing. The CEI, which measures the current economic conditions, continues to improve, up 0.2
percent in February to 104, following a 0.2 percent increase in January and a 0.6 percent increase in December. Data
on US manufacturing output is also positive. This index climbed 0.3 percent in February on the back of 78.7 percent
capacity utilization.
Looking ahead, the US LEI suggests a rosier economic outlook over the next 6-12 months. In February, the LEI
strengthened 0.7 percent to 95.5, after climbing 0.2 percent in January and 0.5 percent in December. As such, we are
confident that Indonesia’s exports to the US will remain firm in the near term.
In Indonesia, the latest CEI and LEI readings suggest that the Indonesian economy is still growing briskly. The CEI edged
up 0.05 percent to 119.54 and the LEI rose 0.62 percent to 126.67, suggesting the Indonesian economy will continue
to expand.
All in all, we expect Indonesian exports to grow by 6.6 percent YoY to US$ 15.4 bn in February 2012. Imports, meanwhile,
are predicted to rise by 21.9 percent YoY to US$ 14.3 bn. Consequently, Indonesia’s trade balance is expected to widen
to US$ 1.04 bn in February 2012 from US$ 0.92 bn in January 2011.

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Purbaya Yudhi Sadewa, Ph.D. Damhuri Nasution
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