July 2, 2026
JAKARTA – Indonesia’s balance of trade has turned negative for the first time in six years as skyrocketing oil prices pushed up imports while weak global demand weighed on exports.
In a press conference on Wednesday, Statistics Indonesia (BPS) official Ateng Hartono said the US$1.61 billion deficit in May was “mainly due to” the large deficit in oil and gas trade.
The last time Indonesia’s monthly imports exceeded exports was in April 2020, with a deficit of $375 million. After that, the trade balance remained positive with 72 consecutive months of surplus.
Ateng said May’s deficit was different from the last one, because “it was more affected by oil and gas”, noting that trade of non-oil and gas products was still in surplus, unlike in April 2020.
Oil and gas imports surged 71 percent from $2.64 billion in May of last year to $4.51 billion in the same month of 2026, not just because of higher prices but also due to a 7.28 percent year-on-year (yoy) increase in volumes of incoming shipments.
Exports of oil and gas products, meanwhile, only reached $760 million in May, down 32 percent from $1.11 billion recorded in the corresponding month of 2025.
BPS categorized imports by use case into three groups: consumption goods, capital goods as well as raw materials and auxiliary goods. Imports of the first two groups rose 22 percent and 12.7 percent yoy, respectively.
Imports of raw materials and auxiliary goods, which typically account for more than two thirds of Indonesia’s overall total imports, surged by 25 percent yoy in May, driven by mineral fuels alongside electrical and mechanical machinery and devices.
As overall imports soared in May, exports went the opposite way, contracting by 5.73 percent yoy. Exports had been relatively high in the comparison period of May 2025, as traders at the time had begun to frontload shipments to the United States to preempt hefty tariffs threatened by US President Donald Trump.
Out of Indonesia’s three main export commodities, only coal recorded a 4.11 percent yoy increase in value in May, despite a 13.6 percent drop in volume. The other two both plunged, with a 14.7 percent yoy decline in the value of iron and steel exports and a 26 percent drop in shipments of crude palm oil (CPO) plus CPO derivatives.
Permata Bank chief economist Josua Pardede told The Jakarta Post on Wednesday that higher global prices, trade wars and general economic uncertainty had weakened demand for Indonesian export goods in May.
However, the short-term pressures revealed “old problems” in “Indonesia’s export structure” that heavily relies on commodities and intermediary products, he noted, emphasizing that the country’s exports still failed to include many high value-added goods like technology, advanced electronics and semiconductors.
The deciding factor behind the import surge was “cost inflation in the global supply chain”, mainly due to price increases in energy and logistics, strong domestic demand for production inputs and inflation in the countries where the goods come from, said Josua.
The higher cost of many imported goods, exacerbated by the recent rupiah depreciation, is a burden on domestic manufacturers.
The manufacturing purchasing managers’ index (PMI) survey for May found that input cost inflation in Indonesia was substantial, only to grow further in June by touching the second-highest rate in the survey’s history.
“A one-month trade deficit can still be considered temporary if oil prices decline again and exports recover. However, the deficit becomes a cause for concern if it persists for several months,” said Josua, pointing out that the negative trade balance might exacerbate the current account deficit and add pressure on the rupiah.
He recommended that the government trim the oil and gas deficit by pushing down fuel consumption, while also reinforcing domestic energy production and expediting the transition to renewables.
Moreover, Josua suggested that consumptive imports be reduced and exports pushed up through further downstream industry development “that has a real bearing on competitiveness and is not just based on export bans”.
Syafruddin Karimi, an economics professor at Andalas University, told the Post on Wednesday that “in the coming months”, the negative consequence of a trade deficit might materialize in pressure on the rupiah, imported inflation, high bond yields and less room for the central bank to cut interest rates.
“If the deficit recurs, investors will conclude that the dollar supply from trade in goods is no longer enough to support the rupiah,” said Syafruddin, adding that a lower rupiah would drive up the cost of raw material imports, eating into producers’ margins.
The situation might end up in weakening consumption and worsening Indonesia’s fiscal standing, because energy subsidies and debt servicing costs “are sensitive” to exchange rate movements and commodity prices, he explained.