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INSTANT VIEW 1-Indonesia Aug exports slide, Sept CPI eases

Monday, 1 Oct 2012 | 12:42 AM ET

JAKARTA, Oct 1 (Reuters) - Indonesian exports in August fell 24.3 percent from a year earlier, a fifth straight month of decline and a deeper fall than expected, the country's statistics bureau said on Monday.

Imports unexpectedly slowed to fall 8.02 percent from a year ago, leading to a trade surplus of $250 million.

Indonesia's inflation in September eased to 4.31 percent from a year earlier, lower t han expected and versus 4.58 percent in August, the statistics bureau said.

KEY POINTS

- Aug exports drop 24.3 pct y/y (vs forecast -12.30 pct)

- Aug trade balance at $0.25 bln surplus (versus forecast for $0.08 bln deficit)

- Sept CPI at 4.31 pct y/y (vs forecast of 4.60 pct)

- Sept CPI at 0.01 pct m/m (vs forecast of 0.22 pct)

For graphics on CPI, see: COMMENTARY

ERIC SUGANDI, ECONOMIST, STANDARD CHARTERED, JAKARTA

"Inflation is very low year-to-date, we see that food prices stabilized after the Ramadan season is over and the government is not going ahead with a fuel price hike.

"We see inflation at 4.5 percent at the end of year and the Bank Indonesia rate staying at 5.75 percent because its a condusive environment. However, the FASBI rate can still be raised 25 basis points by December to hold credit growth and to lower the current account deficit.

"The rupiah is under pressure but at stabilized level.

MARKET REACTION - The rupiah

was little changed after the data at 9,585 per U.S. dollar, having weakened 0.2 percent earlier in the day.

- Indonesia's benchmark stock index

picked up after

the data but remained in negative territory, trading down 0.7 percent by 0440 GMT.

CONTEXT

A Reuters poll before the data showed Indonesia's exports were expected to have fallen in August for a fifth straight month, though the country's trade balance was seen narrowing because of slower growth in imports.

August exports were seen falling 12.3 percent from a year ago, deeper than a 7.27 percent drop in July, due to weak demand from China and a fall in prices for the commodities that make up 70 percent of Indonesia's shipments. The trade balance was forecast to narrow further to $80 million.

Trade imbalances in Southeast Asia's biggest economy have raised concerns among investors, pressuring the rupiah

to

become Asia's worst performing currency this year, with the August improvement not seen as enough to calm market sentiment.

The Reuters poll said annual inflation would be little changed in September at 4.60 percent, as prices of foodstuffs eased after the Eid al-Fitr Muslim festivities in August.

This is likely to keep inflation within Bank Indonesia's end-2012 target of 3.5-5.5 percent.

Inflation in Indonesia in August picked up slightly to 4.58 percent from a year earlier, versus 4.56 percent in July.

The mild inflation figures, coupled with the gloomy outlook of the global economy, mean Bank Indonesia is expected to keep its benchmark rate at a record low 5.75 percent for the rest of the year, economists say.

(Reporting by Andjarsari Paramaditha; Editing by Neil Chatterjee)

((rieka.rahadiana@thomsonreuters.com)(+6221 3199 7170)(Reuters Messaging: rieka.rahadiana.thomsonreuters.com@reuters.net))

Keywords: INDONESIA ECONOMY/INFLATION