Indonesia posts second quarter trade surplus

JAKARTA - Indonesia has posted its seventh consecutive month of trade surplus, bringing the current account to a more sustainable position and within the central bank’s comfort zone. Weaker domestic demand and lower oil prices drove the first Q2 trade surplus (+US$1.6bn) since 2011.

A research note from ANZ Bank said Indoensia’s current account is likely to deteriorate in the second half of the year, with a pick-up in domestic demand driving imports. However the external position will likely remain in a better position than years past.

ANZ adds that the improvement in the current account should bring Bank Indonesia one step closer to cutting rates this year. “The current account and GDP growth profile suggest interest rates can be cut now, but inflation and financial market volatility will delay monetary policy easing till later this year.” www.live.anz.com (ATI).