REPUBLIKA.CO.ID, JAKARTA -- The widening trade balance and current account deficits until the middle of the second quarter did not indicate that the Indonesian economy was overheating, according to Bank Indonesia (BI). High imports in May were aimed at addressing the long-term economic development needs, BI Deputy Senior Governor Mirza Adityaswara stated on Tuesday.
Adityaswara remarked that the trade deficit of US$1.52 billion in May 2018 can add to the current account deficit projected at above 2.5 percent. It will not exceed three percent of the national gross domestic product in the second quarter of 2018, he believed.
Indonesia recorded a trade deficit of $2.38 billion during the period from January to May 2018.
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Imports during the January-May 2019 period include imports for addressing the long-term economic needs. The imports for infrastructure development were valued at $4 billion; defense, at $1.1 billion; and rice, $400 million.
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"Actually, trade balance during the January-May 2018 period suffered a deficit. However, if imports for long-term infrastructure development are excluded, the trade balance will record a surplus," he noted.
Given the assumption, despite a rise in the trade balance and current account deficit, the Indonesian economy is not overheating. In addition, other indicators, including bank loans that only rose 10.2 percent year-on-year and 2.9-3 percent year-to-date as of May 2018, suggested that the Indonesian economy is in the process of recovery.