Indonesia's May trade balance in surplus, inflation slowed further

JAKARTA (AFP) - Indonesia said on Tuesday its trade balance swung back to surplus in May and reported a flurry of other positive data, a boost for South-east Asia's top economy after a recent slowdown.

The surplus was slightly higher than expected at US$70 million (S$87 million), according to the statistics agency, after a deficit of almost US$2 billion in April as exports were hit by a controversial mineral ore export ban.

Inflation slowed further to 6.70 per cent year-on-year in June after spiking last year following a rise in fuel prices, the agency said, and a manufacturing activity survey hit a new record high.

Some good news will be a relief for policymakers after GDP growth in the first quarter slipped to an annualised 5.21 per cent, its slowest pace since late 2009, due in large part to the ban on shipment of some unprocessed mineral ores.

The trade balance in particular is closely watched by investors, and economists said the surplus would be welcome at a time of high uncertainty before an increasingly tight presidential election next week.

"While US$70 million is not much of a surplus to write home about, the fact that exports managed to outdo imports this time round nonetheless comes at a very fortunate time," said Wellian Wiranto, an economist at Singapore's OCBC Bank. He added that with the "increasingly thick atmosphere of uncertain anticipation" before the July 9 poll, the number will be seen as a "relative positive" by the markets.

Ex-general Prabowo Subianto has mounted a strong comeback against long-time favourite Joko Widodo, whose lead has dwindled to a few percentage points in many surveys.

Meanwhile manufacturing activity expanded, HSBC's manufacturing purchasing managers' index for Indonesia indicated. It climbed to 52.7 in June from 52.4 in May, the highest reading since the survey started in April 2011. A reading above 50 indicates growth and below 50 contraction.

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