26 Aug 2021 | News & Feature

BoP: The financial account proves to be the weaker link

  • Indonesia’s balance of payments (BoP) registered a slight deficit of USD 0.5 Bn in Q2-2021.
  • Although the seasonal repatriation of dividends was a slight drag on the current account, the trade balance itself remained remarkably robust, despite expectations of a Lebaran-driven decline.
  • The largest decline however, was observed in the financial account, with outflows largely driven by SOE and government debt repayments.
  • In general, the financial account is likely to be a bigger vulnerability than the current account in the coming months. Aside from looming SOE and government debt repayments, concerns of tapering and risk-off sentiments triggered by Delta are likely to weigh down on capital inflows.