Indonesia's current account deficit widens to US$7.8b

It was way larger than expected.

According to Nomura, the current account deficit (CAD) widened to a larger-than expected USD7.8bn (3.6% of GDP) in Q4 from USD5.3bn (2.4% of GDP) in Q3.

This was largely due to a narrower goods trade surplus, led by the worrisome trend of a worsening of both the oil and gas and non-oil and gas trade balance.

The income balance remained a drag, with a large deficit of USD6.2bn from USD6.9bn in Q3. For 2012, the current account deficit stood at USD24.2bn (2.7% of GDP)
versus a USD1.7bn surplus (0.2% of GDP) in 2011.

Here's more from Nomura:

This is bigger than BI‟s initial guidance and is despite a slew of measures BI announced last year to bring the CAD to a more sustainable level. Clearly, these measures have not been adequate.

The capital account surplus increased to USD11.4bn in Q4 from USD6.0bn in Q3. The net portfolio investment surplus narrowed sharply USD0.2bn in Q4 from USD2.5bn.

This was due to outflows of USD4.9bn from the asset side, mainly debt securities from the public sector (which appears one-off).

On the liabilities side, portfolio inflows still nearly doubled to USD5.0bn from USD2.5bn in Q3, led by inflows from foreigners‟ purchases of public sector debt securities.

Similarly, net „other investments‟ was in a large surplus of USD6.7bn in Q4 (Q3: -USD0.8) largely due to inflows into government programs and projects and „other liabilities‟.

BI noted inflows from “the withdrawal of offshore funds held by domestic banks in response to growing domestic demand for foreign currencies”. Meanwhile, net FDI inflows were largely stable but still high USD4.5bn.