Iron and Steel Imports Contribute to Widening Indonesia's Trade Deficit

The surge in iron and steel imports was one of the factors contributing to the widening trade deficit in Indonesia. Based on data from the Central Statistics Agency (BPS), the value of iron and steel imports throughout 2018 increased by 28.31% to US$10.25 billion compared to the previous year, contributing 6.45% to the total national non-oil and gas imports. This value was the highest compared to other commodity groups (HS) such as plastics and plastic goods, or vehicles and parts, as shown in the graph below.

As is known, the national trade balance in 2018 experienced a deficit of US$8.56 billion compared to a surplus of US$11.84 billion in the previous year. The 20.15% growth in import value to US$188.63 billion, while export value only increased by 6.65% to US$180.06 billion, resulted in an Indonesian trade deficit reaching the worst level in history.

The shrinking non-oil and gas export surplus, a consequence of strong domestic demand coupled with a growing oil and gas trade deficit, was a contributing factor to Indonesia's trade deficit. China remained the largest source of national imports, with a value of US$45.25 billion, a 27.41% increase from US$35.51 billion the previous year.