Trade Review: March Trade Surplus Jumps Before Trump Tariffs Hit

Goods trade surplus surged in March. The goods trade surplus picked up sharply to USD4.3bn in Mar from USD3.1bn in Feb, against expectations of a narrowing (Mansek: USD2.6bn; Consensus: USD2.8bn) (Exhibits 1 and 2). The surprise to our forecast was mainly due to stronger-than-expected commodity exports. Non-Oil&Gas surplus surged to USD6.0bn from USD4.8bn while Oil&Gas deficit was stable at USD1.7bn. The total goods trade surplus reached USD10.9bn in 1Q25 from USD9.1bn in 4Q24.

Commodity still led exports. Exports rose by 5.9% m-o-m, up from a 2.4% increase in Feb, led by higher iron and steel, oil&gas and machinery exports (Appendix). Iron and steel exports surged by 19.6% m-o-m from -6.2% in Feb, led by higher volume (Exhibit 3). Additionally, oil and gas exports rose by 28.8% from 6.7% in Feb. By contrast, coal and CPO exports declined by 5.5% and 3.6% m-o-m from -3.8% and 58.4% in Feb. Nonetheless, total export growth fell sharply to a stronger-than-expected 3.2% y-o-y from 13.9% in Feb, partly reflecting normalization from low-base effect in Feb.

Stronger exports to China and the US. By country, exports to China picked up sharply to 9.5% y-o-y from 5.3% in Feb, led by nickel products (Exhibit 4). Exports to the US also surged to 20% y-o-y from 11.6% in Feb, in line with the surge in electrical equipment and footwear. Meanwhile, exports to the India deteriorated to -20.7% y-o-y from 8.1% in Feb, consistent with the sharp drop in terms of growth of CPO exports.

Steady imports. Imports moderated by 0.4% m-o-m, compared to a 5.1% increase in Feb, slightly below our forecast. Raw material import growth fell to 2.1% y-o-y from 4.7%, consistent with lower oil imports likely due to price effect (Exhibit 5). By contrast, capital goods import growth picked up sharply to 27.4% y-o-y from 5.3%, consistent with the improvement in fiscal spending in March (see Fiscal Watch: Fiscal Spending and Tax Collections Improved in March). In addition, consumption goods import growth improved to -5.8% y-o-y from -21.2%, likely reflecting the Ramadhan and Lebaran effect.

We continue to expect a widening CAD in 2025. We just recently revised down our 2025 CAD forecast to 1.5% of GDP from 1.1% initially (2025 BI forecast range: 0.5-1.3%), reflecting the impact of higher import tariff by the US announced on 2 April (see Tariff Ripple: Mapping the Impact on Indonesia). Despite the better-than-expected trade surplus in Mar, we expect a lower trade surplus ahead due to both volume and price effects. In terms of monetary policy, we expect BI to pause again this week, keeping the policy rate at 5.75% amid persistent pressure to Rupiah and ongoing global uncertainties from Trump tariffs. However, we expect BI to continue sounding dovish by signaling that room for further cuts is still available.

Mandiri Sekuritas Research