Indonesia's trade data continue to point to soft activity

Indeed, Indonesia's trade activity remains depressed. July exports fell 19.2% y/y and imports plunged 28.4%. As a result, the trade surplus surged to USD1.3bn in July. The YTD trade surplus now stands at USD5.7bn, the highest since 2011. 

The improvement masks a slightly concerning underlying trend, which is a steadily weaker consumption of imported durables, now that the IDR is 15.7% weaker versus the USD than a year ago. The fall in imports was partly seasonal (post-Ramadan), but consumer sentiment remains weak, as seen in the continued low level of motorcycle sales. 

Another factor was the delayed launch of key infrastructure projects and in awarding government tenders. The lack of fiscal spending (until mid-April) has had significant economic spillover effects, resulting in reduced private consumption and weak imports of capital and intermediate goods.

"However, President Jokowi's recent cabinet reshuffle would help to speed up investment spending, and this is expected to be a bigger growth driver in H2", says Barclays.