Indonesia’s Current Account Deficit Shrinks to $0.2 Billion as Imports Drop Sharply

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JAKARTA, Investortrust.id — Indonesia’s current account deficit narrowed significantly to $0.2 billion in the first quarter of 2025, equivalent to 0.1% of gross domestic product, according to Bank Indonesia. This marks a sharp improvement from a $1.1 billion deficit (0.3% of GDP) in the fourth quarter of 2024.

“The current account deficit remained low despite global economic moderation,” said Bank Indonesia Head of Communications Ramdan Denny in a statement on Thursday. “The goods trade surplus increased, primarily driven by a larger non-oil and gas trade surplus.”

While non-oil exports declined in line with global demand and softer commodity prices, imports fell more steeply—especially raw materials and intermediate goods—helping to sustain a positive trade balance. This offset pressure from a widening services deficit, which was dragged down by a drop in foreign tourist arrivals and a decline in travel-related income.

The primary income deficit also widened, due to higher portfolio investment returns being repatriated abroad.

External Resilience Despite Financial Account Deficit

Despite a modest $0.3 billion deficit in the capital and financial account, direct investment continued to post a surplus, reflecting steady investor confidence in Indonesia’s economic outlook. Portfolio inflows into domestic bonds also strengthened, though these gains were partially offset by a drop in loan disbursements and an uptick in offshore investments by local firms.

Bank Indonesia reported the overall balance of payments recorded a $0.8 billion deficit in Q1 2025. Still, the country’s foreign exchange reserves remained solid at $157.1 billion, equivalent to 6.5 months of imports and government external debt payments—well above the international adequacy benchmark of three months.

Outlook: Current Account Deficit Expected to Stay Low

Looking ahead, Bank Indonesia projects the current account deficit will remain contained, between 0.5% and 1.3% of GDP for full-year 2025. The outlook is supported by stable trade performance, sustained capital inflows, and effective policy coordination.

“Bank Indonesia will continue monitoring global economic dynamics that could impact the BOP outlook, while continuously strengthening its policy mix response, supported by close policy synergy with the Government and other relevant authorities to bolster external sector resilience,” Ramdan added.