Indonesia's Current Account Deficit Reached 3% of GDP in Q2 2018

Indonesia's current account deficit is one of the factors contributing to the weakening of the rupiah. The occurrence of a current account deficit limits the supply of US dollars in the domestic market because more dollars are used for overseas payments than are received. Primary income transactions and service transactions have been major contributors to the high current account deficit.

Indonesia's balance of payments records show a current account deficit since the fourth quarter of 2011. In the second quarter of 2018, Indonesia's current account deficit amounted to US$8.03 billion, or approximately 3.04% of Gross Domestic Product (GDP). Cumulatively, in the first half of this year, it reached US$13.75 billion, equivalent to Rp 204 trillion, almost doubling compared to the first half of the previous year. This is a matter that the government must address to maintain the value of the rupiah.

Based on its value, the largest current account deficit occurred in the second quarter of 2013, amounting to US$10.13 billion, or approximately 4.24% of GDP. Meanwhile, based on the percentage of GDP, the largest deficit was recorded in the second quarter of 2014, reaching 4.26% of GDP, or US$9.58 billion.