JAKARTA - In a press conference today (14/4), Perry Warjiyo, Governor of Bank Indonesia said that the current account deficit is expected to remain low.
Although exports will decline in line with falling demand and global commodity prices, the trade balance is predicted to improve as a result of a higher decline in imports due to falling domestic demand and reduced production input needs for export activities. The services account deficit is also forecasted to be lower, driven by a decrease in foreign exchange for import transportation costs and a decline in foreign tourism that is not as high as predicted.
The primary income account deficit also declined in line with a reduction in foreign ownership in domestic financial instruments. Overall, the current account deficit in Quarter I-2020 is expected to be lower than 1.5% of GDP.
Meanwhile, foreign capital inflows are predicted to gradually re-enter Indonesia in line with the easing of global financial market panic and improving domestic economy. Overall, the prospect of a steady 2020 NPI can strengthen the resilience of Indonesia's external sector.
The position of foreign exchange reserves at the end of March 2020 was recorded at 121.0 billion US dollars, or equivalent to 7.2 months of import financing or 7.0 months of imports and payment of official foreign debt, and is predicted to increase by the end of April 2020. Bank Indonesia believes the position foreign exchange reserves is more than enough to meet the needs of imports and payment of government foreign debt and the need to stabilize the Rupiah exchange rate. (LM)