Indonesia Loses Ground on Trade Surplus Amid Global Economic Turbulence

UncleWhale · 2026-02-13T05:16:36+00:00

The Indonesian trade outlook is deteriorating due to a sluggish economy and volatile trade environment, raising concerns among analysts. A decline in domestic demand and international trade tensions threaten export performance, with a significant drop in the trade surplus anticipated. Industrialization and diversification through economic partnerships, like the one with the EU, are essential for restoring stability.

UncleWhale

2026-02-13 05:16:36

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The outlook for Indonesia’s trade balance is rapidly deteriorating under the combined weight of a sluggish economic environment and a highly volatile trade landscape. This situation is raising concerns among analysts at major regional financial institutions.

When Domestic Demand Slows and Trade Becomes Chaotic

According to economists Enrico Tanuwidjaja and Vincentius Ming Shen from UOB Bank, demand, previously driven by cyclical factors, is showing signs of weakening. This contraction, expected to occur by early 2026, directly threatens the trade surplus, which forms the foundation of Indonesia’s macroeconomic stability.

At the same time, international trade tensions are intensifying, creating an unfavorable environment for regional exporters. Indonesia, heavily dependent on its export flows, is bearing the brunt of this global deterioration.

Indonesian Export Sector Slowing Under Pressure

The figures speak for themselves. UOB anticipates a significant contraction in the trade surplus: it is expected to decrease from $41 billion in 2025 to around $35 billion this year. This $6 billion reduction highlights the scale of the challenges Indonesia faces.

This downward trend results from two combined factors: a slowdown in export growth and continued imports of capital goods from abroad. Importing equipment remains necessary to maintain industrial competitiveness, but it weighs on the trade surplus.

Diversification and Industrialization: Keys to Saving the Trade Balance

In the face of these obstacles, the trade agreement signed with the European Union offers a glimmer of hope. This agreement creates opportunities for Indonesia to diversify its trade, opening new markets and exchange prospects.

However, according to analysts cited by Jin10, this improvement remains insufficient without a more ambitious strategy. Downstream industrialization has now become essential to sustain the surplus momentum. By further transforming its raw materials locally, Indonesia could create a more robust value chain and increase exports with higher added value.

Indonesia’s economic stability will depend on the country’s ability to undertake this structural transition, far beyond simple bilateral trade agreements.

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