The data came ahead of a report on Monday expected to show the economy grew an annual 5.60 percent in the first quarter, according to a Reuters poll, a touch slower than 5.72 percent in the prior quarter but within the central bank’s target of 5.5-5.9 percent this year.
The upbeat results suggest the economy began the year on a steady footing, after growth hit a four-year low in 2013 on a slowdown in exports and consumption.
“We are looking for a 1Q real GDP growth print of around 5.6 percent (year-on-year), driven by a combination of weak investment growth but resilient private consumption spending, thanks to pre-election spending,” Credit Suisse said in a research note.
Indonesia had a trade surplus of $670 million in March, the statistics office said, more than the $500 million surplus expected by analysts though narrowing from $840 million in February.
Exports unexpectedly rose 1.24 percent from a year earlier, bolstered by stronger palm oil shipments and demand from China and Japan. The median forecast of analysts was for a drop of 1.3 percent. It was the first increase since December.
Imports fell 2.34 percent, less than expectations for a 4.5 percent year-on-year decline.
The rupiah rose 0.3 percent to 11,520 per dollar after the trade data.
The import data, however, can be a double-edged sword. The smaller-than-expected decline underscores resiliency in consumer spending, yet policymakers are aiming to lower imports in an effort to combat the country’s current account deficit.
On a month-on-month basis, imports rose 5.42 percent, with demand for fuel particularly strong amid robust demand for autos among middle class consumers.
The G20 economy is taking further steps to dampen imports and help ease the current account deficit. In April, the government hiked the luxury tax for high-end cars to 125 percent from 75 percent, and local media reported that the government is also eyeing a luxury tax on smartphones.
First-quarter data on the current account - the widest measure of the flow of goods, services and money in and out of the country - is due out on May 9. The central bank has estimated a current account deficit of around 2 percent of gross domestic product in the quarter.
The deficit was at 3.3 percent in 2013 and hit a record 4.4 percent in the second quarter last year. That prompted Bank Indonesia to hike its key reference rate by a massive 175 basis points between June and November to help defend the sliding rupiah and restore investor confidence.
The central bank has stood pat since then, and Friday’s inflation data may give it room to keep rates steady again at its policy meeting on May 8.
The consumer price index rose 7.25 percent year-on-year in April, slowing from a 7.32 percent rise in March, as food prices declined at the start of the harvest season. The result matched the median estimate in a Reuters poll and marked the third straight month of easing inflation.
Core inflation, which excludes administered prices and volatile food prices, was at 4.66 percent, little changed from 4.61 percent a month earlier.
For 2014, the bank has said it expects inflation between 3.5 percent and 5.5 percent, much lower than 8.38 percent last year. The low end of that estimate would be the lowest since February 2012.
Still, Bank Indonesia Governor Agus Martowardojo said on Wednesday that monetary policy would remain tight for the rest of the year, signalling no rate cuts are on the horizon as it stays vigilant on the risk of capital outflows from U.S. stimulus tapering. (Reuters)