JAKARTA • Indonesia's trade balance moved back into surplus last year, after three years of deficits, but the turnaround mostly showed how sluggish the economy has been.
South-east Asia's largest economy posted a US$7.51 billion (S$10.8 billion) surplus last year, chiefly because of a nearly 20 per cent plunge in imports, underlining weak domestic consumption and investment. Every month had a surplus except November and last month, when imports fell less than earlier.
In 2014, Indonesia had a deficit of US$2.2 billion.
For this year, economists expect exports to remain weak but some believe that imports will keep rising, reflecting higher government infrastructure spending and investment.
Exports will remain flat "for some time", Mr Wai Ho Leong of Barclays in Singapore said, but with infrastructure spending picking up, "we believe the stage is set for a rebound in growth momentum".
Indonesia's economy likely grew less than 5 per cent last year, the lowest in six years.
In a bid to lift growth, the central bank on Thursday cut the benchmark policy rate by 25 basis points to 7.25 per cent, in spite of a fragile rupiah, which weakened 10 per cent against the dollar last year.
Hit by low commodity prices, exports dropped 14.6 per cent to US$150.25 billion last year.
Dr Suryamin, head of the statistics bureau that released last month's trade data yesterday, said that by volume, both exports and imports rose last year, except for mining exports. "This means the demand for our products is still there," he said.
The deficit for last month was US$235.8 billion, which the bureau attributed to rising imports of ships, machinery and organic chemicals.
Mr Wellian Wiranto, economist at OCBC in Singapore, said last year's surplus "should be seen as an intended consequence of the tight monetary policy stance" that Bank Indonesia pursued. "Imports slump is indicative of a shift in consumer demand not just in terms of volume but also a lower preference for imported goods as the dollar became dearer," he said.
Mr Rangga Cipta, economist at Samuel Sekuritas in Jakarta, said even with the rupiah's weakening last year, Indonesia "did not become more competitive. In this time of falling global demand and currency war, I'm sorry to say we don't stand a chance to compete".
With such low commodity prices, economists say Indonesia needs to increase manufacturing exports. Last year, exports of electrical machinery, or 6.5 per cent of the total, fell 12.3 per cent. Shipments of footwear, making up 3.4 per cent of all exports, rose 9.7 per cent.