Global Markets Group Trade Outlook Monthly Report Economic Research November 2016 Trade Performance: Narrowing Surplus Author: Juniman Chief Economist Trade Highlights Exports in September 2016 fell to US$ 12.51 bn (down by 1.84% m-o-m). Meanwhile imports in September 2016 also decreased to US$ 11.30 bn (down by 8.78% m-o-m). The falling of exports and imports are caused by the return to normalcy in demand from the countries of Indonesia's major trading partners. Furthermore, the monthly decreased in exports due to the fall in the export of oil & gas, jewelry/gems, machinery/mechanical appliance, ores/slag & ash, knitted apparel, and oil seeds. The fall in the month-on-month imports mainly due to the decrease in the import of oil & gas, machinery/mechanical appliance, machinery/electrical appliance, vehicles & parts, fertilizer, and oil seeds. On a yearly basis, exports still fell by 0.59% y-o-y in September 2016, while imports also decreased by 2.26% y- o-y. The fell in the year-on-year exports indicates demand for Indonesia's exports in September 2016 was lower than in September 2015. The decreased in the year-on-year imports suggests relatively weakening domestic activity in September 2016 than in September 2015. We expect the Indonesia s exports increase in October 2016. This is caused by rising prices of some commodities such as crude oil, aluminum, tin, nickel and coal. Furthermore, in line with the improving economy of Indonesia's major trading partners will have an impact of rising demand from these countries, which in turn make Indonesia s exports increased. We expect Indonesia s exports will increased to US$ 12.64 billion in October 2016 compared with US$ 12.51 billion in previous month. Meanwhile, we also expect Indonesia s imports rise in October 2016. It is caused by increased domestic economic activity in line with the start of the local elections campaign and the acceleration of government spending. We expect Indonesia s imports may increase to US$ 11.79 billion in October 2016 compared with US$ 11.30 billion in the previous month. Consequently, Indonesia s trade balance is expected to surplus US$ 0.85 billion in October 2016, narrowing compare than a surplus US$ 1.22 billion in one month earlier. Exports Review Exports in September 2016 fell to US$ 12.51 bn (down by 1.84% m-o-m) from US$ 12.75 bn in August 2016. On a yearly basis, exports in September 2016 slightly fell by 0.59% y-o-y. The m-o-m rise in September 2016 stemmed from lower non-oil and gas exports (down by 1.35% m-o-m to US$11.45 bn from US$11.61 bn in August 2016), while the oil and gas exports also decreased by 6.77% m-o-m to US$1.06 bn in September 2016 from US$1.14 bn in August 2016. Furthermore, the decreased in oil and gas exports was attributable to lower exports of crude oil (down by 12.36% m-o-m to US$ 0.43 bn in September 2016), while exports of oil products fell by 2.02% m-o-m to US$ 0.08 bn in September 2016 and exports of natural gas also decreased by 2.65% m-o-m to US$ 0.55 bn in September 2016. The fall in exports of crude oil and natural gas stemmed from the decreasing of production by 11.14% and 2.85% respectively. Meanwhile, the price of Indonesian crude oil on International markets actually rose to US$ 42.17 per barrel in September 2016 from US$ 41.11 per barrel in the previous month. Meanwhile, lower exports of jewelry/gems, machinery/mechanical appliance, ores/slag & ash, knitted apparel, and oil seeds dragged down non-oil and gas exports. Figure 1: Year on Year Growth of Indonesia s Exports yoy (%) 150 Exports Performance (y-o-y growth) Total exports Oil & gas exports Non-oil & gas exports 120 90 60 30 0-30 -60-90 Apr-16 Nov-15 Jun-15 Aug-14 Dec-12 Feb-12 Apr-11 Nov-10 Jun-10 Aug-09 Mar-09 Oct-08 May-08 Jul-07 Feb-07 Sep-06 Apr-06 Nov-05 1
In September 2016, the non-oil and gas exports to Singapore, China, and Japan fell, but to the US and India rose compare with previous month. The non-oil and gas exports to Japan fell by 5.73% m-o-m to US$ 1105.3 mn, to the US they increased by 1.10% m-o-m to US$ 1360.9 mn, to Singapore they fell by 8.00% m-o-m to US$ 691.1 mn, to China they decreased by 0.73% m-o-m to US$ 1345.3 mn, and to India they also rose by 9.70% m-o-m to US$ 980.4 mn. In period of January September 2016, the US was Indonesia's largest trading partner in non-oil and gas products (12.24%) of Indonesia's goods were exported to this country, followed by China (10.26%), Japan (10.07%), India (7.33%), and Singapore (6.92%). Import Review The central bureau statistics also reported that in September 2016 Indonesia s imports reached US$ 11.30bn (down by 8.78% m-o-m from US$ 12.39 bn in August 2016). The decrease in September 2016 stemmed from lower non-oil & gas imports (down by 9.77% m-o-m), while oil & gas imports also fell by 2.97% m-o-m. Moreover, the decreased in oil and gas imports was attributable to lower imports of oil products (fell by 3.52% m-o-m to US$ 0.98 bn in September 2016) and crude oil (fell by 3.91% m-o-m to US$ 0.63 bn in September 2016), while imports of natural gas rose by 5.95% m-o-m to US$ 0.14 bn in September 2016. Furthermore, non-oil and gas imports in September 2016 were dragged down of the decreasing imports of machinery/mechanical appliance, machinery/electrical appliance, vehicles & parts, fertilizer, and oil seeds. On a yearly basis, imports in September 2016 decreased by 2.26% y-o-y. The fell (y-o-y) in September 2016 imports stemmed from lower oil & gas imports (down by 8.88% y-o-y), while the non-oil & gas imports slightly fell by 0.95% y-o-y. Figure 2: Year on Year Growth of Indonesia s Imports Imports Performance (y-o-y growth) yoy (%) 170 Total import Oil & gas import Non-oil & gas import 120 70 20-30 -80 Apr-16 Nov-15 Jun-15 Aug-14 Dec-12 Feb-12 Apr-11 Nov-10 Jun-10 Aug-09 Mar-09 Oct-08 May-08 Jul-07 Feb-07 Sep-06 Apr-06 Nov-05 By type of good, monthly imports of consumer goods, raw material, and capital goods fell in September 2016 (see the table below). For the January September 2016 period, the share of consumer goods, raw material, and capital goods imports are 9.18%, 74.55%, and 16.27% respectively. Attachment 1: Indonesia's Imports include Trade Zone by Type of Good (Mil US$) Value CIF (US$ mn) Value CIF (US$ mn) Jan-Sep Share of Import Category Aug Sep M-o-M growth Jan-Sep Jan-Sep growth (Y-o-Y) Jan-Sep 2016 2016 2016 (%) 2015 2016 (%) (%) Import Total 12385.1 11297.2-8.78 107989.1 98693.4-8.61 100.00 Consumer Goods 1174.8 996.7-15.16 8031.7 9060.0 12.80 9.18 Raw Material 9145.0 8482.7-7.24 81568.6 73572.6-9.80 74.55 Capital Goods 2065.3 1817.8-11.98 18388.8 16060.8-12.66 16.27 In September 2016, the non-oil and gas imports from Thailand, China, Japan, the US, and South Korea fell compare with previous month. The non-oil and gas imports from China fell by 5.85% m-o-m to US$ 2528.8 mn, from the US they decreased by 17.97% m-o-m to US$ 658.4 mn, from Singapore they rose by 5.35% m-o-m to US$ 618.0 mn, from Japan they fell by 14.27% m-o-m to US$ 1060.0 mn, from South Korea they decreased by 13.26% m-o-m to US$ 455.2 mn, and from Thailand they also fell by 7.09% m-o-m to US$ 736.6 mn. In period of January September 2016, China was Indonesia's largest trading partner in non-oil and gas products (25.88%) of Indonesia's goods were imported from this country, followed by Japan (11.16%), Thailand (7.82%), Singapore (6.34%), the US (6.25%), and South Korea (5.09%). In September 2016, Indonesia's trade balance was a increasing surplus due to the decreasing imports faster than exports. Indonesia s trade balance was a surplus US$ 1.22 bn in September 2016, widening compare than in August 2016 when it stood at a surplus US$ 0.36 bn. 2
Analysis Indonesia's exports decrease in September 2016 but they were still above the US$12.00 bn mark. The falling of exports is caused by the return to normalcy in demand from the countries of Indonesia's major trading partners. Furthermore, this fall was due to the decreasing of oil & gas and non-oil & gas exports. The decreased in Indonesia s non-oil and gas exports in September 2016 mainly stemmed from the fall in Indonesia s non-oil and gas exports to Singapore, Malaysia, Thailand, Netherland, Italy, China, Japan, and South Korea. The fall in non-oil and gas exports to Singapore, Malaysia, Thailand, Netherland, Italy, China, Japan, and South Korea were attributable to lower demand for Indonesian goods in those countries due to the weakening economic activities in those countries. The start recovery of global economic activity has also exerted a positive impact on exports of other ASEAN countries. Indonesia s exports show a similar trend compared to that of other ASEAN countries (Malaysia, Singapore, and Thailand).This indicates that Indonesian goods have not lost competitiveness to products from other ASEAN countries. Figure 3: Comparison Indonesia s Exports growth with Other ASEAN Countries 60 Export Growth (Y-o-Y % ) ma,3 Indonesia Malaysia Philippines Singapore Thailand 40 20 0-20 -40-60 Feb-16 Jul-15 Dec-14 Mar-13 Aug-12 Jan-12 Jun-11 Nov-10 Apr-10 Sep-09 Feb-09 Jul-08 May-07 Oct-06 Mar-06 Aug-05 Jan-05 Jun-04 Nov-03 Apr-03 Sep-02 Feb-02 Jul-01 Dec-00 On a year to date basis, Indonesia s exports still fell by 9.41% in January September 2016 period. The fell in the year to date exports indicates demand for Indonesia s exported goods in January September 2016 period was lower than the same period in 2015. Meanwhile Indonesia's imports also fell in September 2016 and they were below the US$12.00 bn mark. The falling of imports mainly comes from the slowing of domestic economy activities in September 2016. On a year to date basis, imports still fell by 8.61% in January September 2016 period. The fell in year to date imports suggests relatively weakening domestic activity in January September 2016 period compare with the same period in 2015. Trade Outlook The economic growth of Indonesia s main trading partners was mixed. The US economic grow 1.5% y-o-y in 3Q 2016 improving compare 1.3% y-o-y in 2Q 2016. Japan economic grow 0.8% y-o-y in 2Q 2016, improving from 0.2% y-o-y in the previous quarter. Meanwhile, the China economic maintained growth at 6.7% y-o-y in 3Q 2016, unchanged compare with the previous quarter, and the Singapore economic grew 0.6% y-o-y in 3Q 2016 slowing compare from 2.0% y-o-y in 2Q 2016. Furthermore, the Euro Area economic was grew by 1.6% y-o-y in 3Q 2016 stable compare with the previous quarter. Leading Economic Indicator Index on Indonesia main trading partners was improved. The US leading economic index rose to 124.4 in September 2016 from 124.1 in August 2016, Japan leading economic index increased to 100.9 in September 2016 from 100.6 in the previous month, and European leading economic index slightly rose to 107.5 in September 2016, compare with 107.4 in the previous month. Furthermore, Singapore leading economic index increased to 102.2 in 2Q 2016 from 100.8 in 1Q 2016, and China leading economic index rose to 155.9 in September 2016 from 154.2 in the previous month. Industrial Production Index on Indonesia main trading partners was mixed. Industrial production measures changes in output for the industrial sector of the economy which includes manufacturing, mining, and utilities. The US industrial production index was improving growth to contracted 1.0% (y-o-y) in September 2016 from contraction 1.3 % (y-o-y) in August 2016, Japan industrial production index was slowing growth to 0.8% y-o-y in September 2016 compare than 1.1% y-o-y in August 2016, and European industrial production index was improving growth to 1.9% y-o-y in August 2016 from contraction 0.4% y-o-y in the previous month. Meanwhile, China industrial production index was also maintaining growth at 6.0% (y-o-y) in September 2016, unchanged compare with a one month earlier. 3
All in all, we believe that the economic activities in Indonesia s main trading partners such as the US, India, Japan, and European were Improved. Furthermore, this condition will create increasing demand for Indonesian products in those countries. We expect the Indonesia s exports increase in October 2016. This is caused by rising prices of some commodities such as crude oil, aluminum, tin, nickel and coal. Furthermore, in line with the improving economy of Indonesia's major trading partners will have an impact of rising demand from these countries, which in turn make Indonesia s exports increased. Meanwhile, we also expect Indonesia s imports rise in October 2016. It is caused by increased domestic economic activity in line with the start of the local elections campaign and the acceleration of government spending. Against this backdrop, we expect exports to reach US$ 12.64 bn in October 2016 higher than the US$ 12.51 bn in September 2016. Indonesia s imports are expected to rise to US$ 11.79 bn in October 2016 from US$ 11.30 bn in September 2016. Consequently, Indonesia s trade balance is expected to surplus US$ 0.85 billion in October 2016, narrowing compare than a surplus US$ 1.22 billion in September 2016. Attachment 2: Indonesia's Trade Performance (Billions US$) April May June July August September OctF NovF 2015 2016 Export Total Export 11.48 11.51 12.97 9.53 12.75 12.51 12.64 12.50 115.21 104.36 2016 YTD (Jan-Sep) Oil & Gas 0.89 0.96 1.19 1.00 1.14 1.06 1.12 1.10 14.40 9.70 Total excl. oil/gas 10.58 10.56 11.79 8.53 11.61 11.45 11.53 11.40 100.81 94.66 Import Total Import 10.81 11.14 12.10 9.02 12.39 11.30 11.79 11.80 107.99 98.69 Oil & Gas 1.36 1.67 1.77 1.51 1.80 1.74 1.76 1.66 19.41 13.74 Total excl. oil/gas 9.45 9.47 10.32 7.51 10.59 9.55 10.03 10.15 88.58 84.95 Balance Total incl. oil/gas 0.66 0.37 0.88 0.51 0.36 1.22 0.85 0.69 7.22 5.67 Oil & Gas -0.47-0.71-0.58-0.51-0.66-0.68-0.65-0.55-5.01-4.05 Total excl. oil/gas 1.13 1.08 1.46 1.02 1.02 1.90 1.50 1.25 12.23 9.72 Y on Y Growth (percent) Export Total Export -12.48-9.72-3.94-16.88 0.18-0.59-13.15-9.41 Oil & Gas -38.84-31.22-17.56-29.75-25.63-26.97-38.33-32.66 Total excl. oil/gas -9.18-7.09-2.31-15.05 3.70 2.85-7.77-6.09 Import Total Import -14.36-4.07-6.80-10.56-0.11-2.26-19.64-8.61 Oil & Gas -41.70-19.80-31.25-34.34-14.80-8.88-41.21-29.19 Total excl. oil/gas -8.15-0.64-0.74-3.55 2.90-0.95-12.61-4.10 M on M Growth (percent) Export Total Export -2.83 0.34 12.68-26.54 33.76-1.84 Oil & Gas -28.04 7.42 23.92-15.88 14.01-6.77 Total excl. oil/gas 0.13-0.26 11.66-27.62 36.07-1.35 Import Total Import -4.32 3.02 8.57-25.45 37.35-8.78 Oil & Gas -12.26 22.49 6.21-14.99 19.22-2.97 Total excl. oil/gas -3.05 0.22 8.98-27.24 40.99-9.77 4
Economic Growth and Purchasing Manager Index 20.0 15.0 Economic Growth Y-o-Y (%) 65.0 60.0 55.0 Purchasing Manager Index 10.0 5.0 0.0-5.0-10.0-15.0 Jun-16 Mar-16 Dec-15 Sep-15 Jun-15 Mar-15 Dec-14 Sep-14 Jun-14 Dec-13 Sep-13 Jun-13 Mar-13 Dec-12 Jun-12 Mar-12 Dec-11 Jun-11 Mar-11 Dec-10 Sep-10 Jun-10 Mar-10 Dec-09 Sep-09 Jun-09 Mar-09 Dec-08 Sep-08 Jun-08 Mar-08 Sep-07 Jun-07 Mar-07 Dec-06 Sep-06 US China EU Japan 0.8 1.6 6.7 50.0 45.0 40.0 35.0 30.0 25.0 Oct-16 Jul-16 Apr-16 Oct-15 Jul-15 Apr-15 Oct-14 Jul-14 Apr-14 Jan-14 Jul-13 Apr-13 Jan-13 Oct-12 Apr-12 Jan-12 Oct-11 Jul-11 Apr-11 Jan-11 Oct-10 Jul-10 Apr-10 Oct-09 Jul-09 Apr-09 Jan-09 Oct-08 Jul-08 Apr-08 Jan-08 Oct-07 Jul-07 Apr-07 Jan-07 Oct-06 US EU Japan China Leading Economic Indicator Index and Baltic Dry Index 135.0 125.0 115.0 105.0 EU (LHS) US (LHS) Japan (LHS) Singapore LHS) China (RHS) 180.0 160.0 140.0 120.0 100.0 80.0 14000 12000 10000 8000 6000 Baltic Dry Index 95.0 60.0 4000 85.0 75.0 Nov-12 Jan-13 Mar-13 Jul-13 Sep-13 Nov-13 Jan-14 Jul-14 Sep-14 Nov-14 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Mar-16 May-16 Jul-16 40.0 20.0 0.0 2000 0 10-Nov-16 07-Aug-16 04-May-16 30-27-Oct-15 24-Jul-15 20-Apr-15 15-12-Oct-14 09-Jul-14 05-Apr-14 31-Dec-13 27-Sep-13 24-Jun-13 21-Mar-13 16-Dec-12 12-09-Jun-12 06-Mar-12 02-Dec-11 29-Aug-11 26-May-11 20-Feb-11 17-Nov-10 14-Aug-10 11-May-10 05-Feb-10 02-Nov-09 30-Jul-09 26-Apr-09 21-Jan-09 18-Oct-08 15-Jul-08 11-Apr-08 07-Jan-08 04-Oct-07 Source: Conference Board & Maybank Indonesia Economic Research Industrial Production Index and Crude Oil Price 40.0 30.0 20.0 Industrial Production Index Yearly Growth US$/barrel 160 140 120 WTI MINAS Brent 10.0 100 0.0-10.0-20.0 May-08 Sep-08 Jan-09 May-09 Sep-09 May-10 Sep-10 Jan-11 May-11 Jan-12 May-12 Jan-13 Sep-13 Jan-14 Sep-14 May-15 Sep-15 May-16 80 60 40-30.0 20-40.0 US EU Japan China Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Feb-13 Jul-13 Dec-13 Oct-14 Mar-15 Aug-15 Jun-16 Nov-16 5
Macro Economic Indicators Indicators 2013 2014 2015 2016F 2017F Inflation (%YoY) 8.08 8.36 3.35 3.15 4.01 Inflation (% avg) 6.40 6.42 6.38 3.52 3.91 Core Inflation (%YoY) 4.32 4.93 3.95 3.40 3.50 Core Inflation (% avg) 4.20 4.53 4.89 3.41 3.55 Exchange Rate Eop (Rp/US$) 12189 12440 13795 12950 12850 Exchange Rate Avg (Rp/US$) 10564 11885 13458 13230 12690 Curent Account (% GDP) -3.19-3.09-2.06-2.09-2.30 Fiscal Balance (% GDP) -2.33-2.20-2.80-2.50-2.50 Interest Rate BI 7-Day (Reverse) Repo Rate (% p.a) 5.90 5.86 6.25 4.75 4.75 BI 12 month Rate (% p.a) 7.50 7.75 7.50 6.00 6.00 Time Deposit 3 month (% p.a) 7.61 8.95 7.99 6.14 5.96 Lending rate working capital (% p.a) 12.12 12.81 12.46 11.28 11.09 Credit Growth (% YoY) Property Credit 26.53 17.29 11.86 13.05 14.34 Consumer credit 13.67 11.51 9.09 8.39 10.73 Working Capital Credit 20.43 10.83 9.04 8.11 9.59 Investment Credit 34.95 13.16 14.69 9.78 10.62 Total Credit 21.60 11.58 10.44 8.61 10.17 Deposit 13.60 12.29 7.26 6.50 8.08 NPL Commercial Banks (%) 1.77 2.16 2.49 3.00 2.76 Car Sales (1000 Units) 1230 1208 1006 1053 1108 Car Sales Growth (%) 10.18-1.78-16.69 4.60 5.23 Motorcycle Sales (1000 Units) 7744 7867 6480 6035 6272 Motorcycle Sales Growth (%) 9.62 1.59-17.63-6.87 3.93 Government Capex (Rp tn) 180.9 147.3 209.0 317.1 387.4 Unemployment Rate (%) 6.25 5.94 6.18 5.70 5.60 International Reserve (US$ bn) 99.4 111.9 105.9 118.2 121.1 GDP Growth (%) 5.58 5.02 4.79 5.06 5.10 Note : the red numbers are forecast Source : Maybank Indonesia Economic Research MAYBANK INDONESIA ECONOMIC RESEARCH Sentral Senayan III, 8th Floor Jl. Asia Afrika No. 8, Gelora Bung Karno - Senayan Jakarta 10270, Indonesia Ph: +62 (021) 29228888 Fax: +62 (021) 29228849 Juniman Chief Economist Juniman@maybank.co.id +62-21-229228888 (29682) Anup Kumar Myrdal Gunarto Bond Analyst Economist AKumar@maybank.co.id MGunarto@maybank.co.id +62-21-229228888 (29692) +62-21-229228888 (29695) DISCLAIMER The information contained has been taken from sources we deem reliable. PT Bank Maybank Indonesia Tbk and/or its affiliated companies and/or their respective employees and/or agents disclaim any liabilities including the accuracy or completeness of the information and opinions contained in this report or as to any information contained in this report or any other such information or opinions thereof. The information contained in this report is not to be taken as any recommendation made by PT Bank Maybank Indonesia Tbk or any other person to enter any agreement with regard to any investment mentioned in this document. This report is prepared for general circulation. It does not have regards to the specific person who may receive this report. In considering any investments you should make your own independent assessment and seek your own professional financial and legal advice. ANALYST CERTIFICATION Each contributor to this report hereby certifies that all the views expressed accurately reflect our views about the companies, securities and all pertinent variables. It is also certified that the views and recommendations contained in this report are not and will not be influenced by any part or all of our compensation. 6