Indonesia's trade surplus faces a narrowing dilemma, potentially shrinking to $35 billion by 2026

According to reports from Jinjishi Data, Dahua Bank economists’ latest analysis indicates that Indonesia’s foreign trade situation is undergoing subtle changes. The once-stable trade surplus in this Southeast Asian economy is facing pressure to narrow, with an expected decline from last year’s $41 billion to approximately $35 billion this year, a drop of up to 15%, signaling weakening economic growth momentum.

Multiple factors are compounding, putting pressure on the trade surplus to shrink

The contraction of Indonesia’s trade surplus is not accidental. Dahua Bank’s analysis points out that the slowdown in economic growth combined with escalating global trade tensions are creating dual pressures. As global trade tensions intensify, Indonesia, as an export-oriented economy, is among the first to feel the impact of reduced demand. Economists warn that this trend may become more apparent by early 2026, when the risk of demand contraction will be even more pronounced.

Weak export growth and persistent import pressures

From the supply side, Indonesia’s trade surplus is also under pressure due to structural imbalances. Export growth has significantly slowed, while capital goods imports remain high—indicating that the economy still needs to procure production equipment from abroad, which shows domestic industrial chain reinforcement remains strong. This uneven trade rhythm directly compresses the space for the surplus.

Partnership agreements as key support, industrial transfer may change the situation

It is worth noting that the newly signed economic partnership agreement with the European Union provides some support for Indonesia’s trade prospects. As the agreement progresses, it is expected to attract more segments of the industrial chain to Indonesia, which is crucial for maintaining the trade surplus. Meanwhile, broader diversification of trade partnerships will also be an important strategy for Indonesia to cope with the narrowing trade surplus.

Dahua Bank’s analysis reminds investors that although Indonesia’s fundamentals remain stable, the momentum of foreign trade is indeed weakening, and the trend of shrinking trade surplus warrants ongoing attention.