Goods trade surplus stayed low. The goods trade surplus remained low at USD1.3bn in Feb albeit widening slightly from USD1bn in Jan (Mansek: USD1.0bn; Consensus: USD1.5bn) (Exhibits 1 and 2). The non-oil and gas surplus narrowed to USD2.2bn from USD3.2bn, while the oil and gas deficit shrank more sharply to USD0.9bn from USD2.3bn, reflecting lower oil imports (Exhibit 3).
Exports pick up modestly, led by CPO. Exports rebounded by 0.1% m-o-m after a 15.9% contraction in Jan, implying 1.0% y-o-y from 3.4% previously, led by CPO and vehicle exports. Additionally, oil and gas exports rebounded by 21% m-o-m, reversing 29% drop in Jan, driven mainly by higher gas and crude oil exports. By contrast, precious stones incl. gold fell sharply, consistent with slower exports non-oil and gas to India, which contracted by 3.6% y-o-y, reversing 24.3% increase previously.
Imports eased, led by oil. Imports contracted by 1.5% m-o-m, though improving from an 11.0% decline in Jan, implying 10.8% y-o-y from 18.2% in Jan. Despite crude oil prices 7.2% higher from January (the Iran war started on 28 Feb), oil imports dropped by 37% m-o-m implying -30.4% y-o-y from 27.5%. This suggests the drop in oil imports reflect a seasonal drop which might be temporary. Non-oil & gas imports picked up to 18.2% y-o-y from 16.7%, led by consumer goods which likely reflect higher demand ahead of the Lebaran holiday (Appendix).
Non-oil and gas imports by country. By country, non-oil and gas imports from China and Japan increased, driven by stronger machinery and equipment and iron-and-steel. Imports from India contracted 5.5% y-o-y, improving from 7.6% contraction previously, consistent with higher precious stones imports. Additionally, imports from the US improved to -0.7% y-o-y from 7.8% contraction previously, likely reflecting higher imports of chemical products.
We still expect a wider current account deficit in 2026. We continue to forecast the CAD widening to 1.1% of GDP in 2026 from -0.1% in 2025. Despite the likely less destructive impact from US tariffs following the Supreme Court decision, the ongoing war could increase oil import costs as commodity terms of trade worsen. For every 10% increase in oil prices the CAD could widen by 0.1%. With a Strait of Hormuz closure, however, limited oil supply could provide short-term ‘relief’ to the trade balance. Indonesia sources around 11.4% of its fuel imports and 20.5% of its crude oil from the Middle East (Exhibit 4-5).
