22 Feb 2024 | News & Feature

BoP - No glory in FA surplus, no shame in CA deficits.

  • Indonesia recorded a USD 8.62 Bn balance of payments (BoP) surplus in Q4 2023, a significant recovery from the USD 1.10 deficits in the previous quarter thanks to the sharp increase in the financial account (FA).
  • Foreign investors’ appetite for Indonesian financial assets and the bottoming external debt deleveraging trend explains the increase in FA. However, this trend may not extend to the upcoming period given the moderating global rate cuts expectation.
  • The deepening services account deficit and continuous increase in dividend payments tipped Indonesia’s current account (CA) to another deficit despite the increase in goods account surplus. The widening CA deficit could be interpreted as a sign of the still-vibrant Indonesian economy amidst the slowing global demand.