Data on November trade and December inflation -- which was 4.3 percent year-on-year -- is likely to strength expectations the central bank, Bank Indonesia (BI), will hold its policy rate at a record low 5.75 percent at a Jan. 10 meeting.

Many analysts believe inflation will rise in the new year, and some feel BI will have to raise interest rates to contain it even though that could reduce Indonesia's growth rate.

The trade deficit narrowed to $480 million from a record $1.54 billion in October. The November deficit was slightly higher than the $450 million forecast in a Reuters poll.

Trade deficits in the G20 economy have put pressure on the rupiah which in 2012 weakened around 6 percent against the dollar in 2012 and was emerging Asia's worst-performing currency.

In November, imports rose grew 9.92 percent on year, a bit slower than October's 10.82 percent increase but above the poll's median forecast of 8.02 percent.

Exports in November were down 4.6 percent year-on-year, or less than the previous month's 7.61 percent drop, the country's statistics bureau said. The Reuters poll had projected a decline in November of 6.9 percent.

November was the eighth straight month in which exports have been lower than a year earlier.

Suryamin, the head of the statistics bureau, said that in November, export volumes for products such as crude palm oil and tea increased "but the value fell due to declining prices. It suggests that the crisis in Europe and globally remains."

The official said that for the first 11 months of 2012, Indonesia had an accumulated trade deficit of $1.33 billion.

Worry Over the Current Account

One analyst voiced concern over the impact of the trade figures on the current account.

"On the basis of the October and November visible trade numbers and a fairly conservative assumption for December, Indonesia is heading for something like a $7.3 billion year-on-year swing in the goods component of the current account in 4Q 2012, taking it into deficit for the first time ever," Credit Suisse economist Robert Prior-Wandesforde wrote in a research note.

"Assuming the services, income and transfer balances are the same in the fourth quarter of 2012 as they were in 2011 -- not unreasonable assumptions -- this adds up to a current account deficit of $9.6 billion (2.9 percent of GDP), comfortably surpassing the previous record of $7.7 billion in the second quarter and a lot higher than the 2.3 percent figure projected by the central bank," Prior-Wandesforde said.

Wednesday's data also showed that December's annual inflation pace, a fraction smaller than November's 4.32 percent level while the month-on-month pace increased to 0.54 percent from just 0.07 percent.

Indonesia's 2012 full-year consumer price index was well within Bank Indonesia's target for 3.5-5.5 percent.

Buoyant domestic demand and strong investment helped the Indonesian economy to grow more than 6 percent in June-September compared with a year earlier. (Reuters)