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China’s exports shrank much faster than expected and imports fell, albeit at a slower pace, as manufacturers struggled to find demand abroad and domestic consumption remained sluggish.   China’s factory activity shrank faster than expected in May on weakening demand. The PMI subindexes showed factory output swung to contraction from expansion while new orders, including new exports, fell for a second month.   Source : https://edition.cnn.com/2023/06/07/economy/china-trade-may-exports-hnk-intl/index.html    

Indonesia experienced a slight trade surplus of US$0.44 billion in May 2023, indicating a surplus for 37 consecutive months since May 2020, according to Statistics Indonesia (BPS). The amount is also lower than the surplus of US$2.9 billion recorded in May 2022. BPS also noted that Indonesia's export value in May 2023 had reached US$21.72 billion, increasing by 12.61 percent month-to-month. It also rose by 0.96 percent compared to May 2022. Furthermore, Indonesia's import value had reached US$21.28 billion in May 2023, up by 38.65 percent compared to the imports recorded in April 2023. Additionally, it increased by 14.35 percent year-on-year.   Source : https://en.antaranews.com/news/285219/indonesias-trade-balance-recorded-slight-surplus-in-may-2023-bps

The expansion of export markets and the impact of comprehensive economic agreements with several countries are expected to boost production demand, leading to an increase in Indonesia's Manufacturing Purchasing Managers' Index (PMI) for the remainder of the year. "As the industry is multisectoral, we look at the global situation, we push for new markets, and secondly, we maintain it through Comprehensive Economic Partnership Agreements (CEPA), which will help with that," said Coordinating Minister for Economic Affairs Airlangga Hartarto. He also expressed confidence that Indonesia's Manufacturing PMI would rebound in the coming months as the manufacturing sector expands again.   Source : https://www.ibai.or.id/news/item/3489-government-drives-efforts-to-expand-export-markets.html

China’s exports fell for the first time since February, adding to concerns that growth in the world’s second largest economy could be faltering. Exports fell 7.5% year-on-year to $283.5 billion, far worse than the 0.4% decline predicted by a Reuters poll. The decline was so sharp that export volumes came in below their levels at the start of the year, after accounting for seasonality and changes in export prices, Julian Evans-Pritchard, head of China Economics at Capital Economics, said in a note.   Source : https://www.cnbc.com/2023/06/07/chinas-exports-plunge-by-7point5percent-in-may-far-more-than-expected.html

Indonesia’s aviation industry continues to recover as passenger figures have reached 80 percent of the pre-pandemic level, according to the Indonesian National Air Carriers Association (INACA). Airlines are confident about the demand trajectory after air travel picked up rapidly, as reflected in increasing passenger numbers, expanding fleets and the opening of new flight routes.   Source : https://www.thejakartapost.com/business/2023/05/19/air-travel-in-indonesia-inching-closer-to-pre-pandemic-level.html

India, along with Southeast Asian countries such as Indonesia, is expected to sustain growth in the medium-term in Asia region, replacing China as the key growth driver, Morgan Stanley and Nomura said in two separate reports. “Even with a slowing China, we expect GDP growth in Asia to sustainably outperform other emerging markets and the US. India and Southeast Asia are set to be the fastest-growing economies this decade. Asia’s flying geese model is once again in action,” Nomura said in a global markets research report. In its global economics mid-year outlook, Morgan Stanley said: “China’s recovery should support regional strength on a cyclical basis, but medium-term strength comes from India and Indonesia. Other emerging markets are forecast to remain subdued, though we see growth improving in most economies in 2024 as real rates edge down and domestic demand recovers.”   Source : https://www.business-standard.com/economy/news/india-indonesia-to-drive-asia-s-growth-morgan-stanley-nomura-reports-123060500998_1.html

Amidst renewed whisperings of an impending recession in the second half of 2023 and the possibility of a debt default by the U.S. government that could trigger unemployment and surging interest rates, importers and logistics service providers (LSPs) are bracing for a potential hard landing. On balance, however, there are signs that a number of the challenges to global supply chain performance in 2023 are abating. Big gains in import volumes partly driven by a spike in imports from China, U.S. container import volumes increased significantly in April 2023, rising 9% from March 2023. Although container volume was down 17.8% from April 2022, imports were up 5.3% from pre-pandemic April 2019 and are continuing to track to 2019 levels—an encouraging trend. The good news is that the pressure on supply chains and logistics operations is continuing to ease. However, we’re not in the clear just yet. Several challenges—from labor issues, elevated fuel prices, and economic uncertainty to the impact of the war in Ukraine and the lingering pandemic-related disruptions—continue to stress logistics operations. But by proactively monitoring key supply chain performance and economic indi- cators, importers and LSPs can address any capacity constraints or supply chain disruptions that may arise in the short term, while building long-term supply chain resilience to mitigate risk in the latter half of 2023 and beyond.

The pandemic posed a tremendous economic challenge, especially for emerging economies such as Indonesia. But it also marked a watershed moment for the country’s economic reform efforts. The crisis enabled Indonesia to reduce its reliance on volatile foreign capital inflows and rethink its growth pathway. Indonesia’s current account deficit problem stems from insufficient foreign direct investment (FDI). In 2021, Indonesia’s FDI inflow was only 1.8 per cent of GDP, compared to Vietnam’s 4.3 per cent and Malaysia’s 5 per cent. Instead, the economy has depended on volatile commodity-related exports and volatile foreign inflows in bonds and equity markets. The government were quick to implement policy reforms that have partly borne fruit. The first of them is reform in the real economy. The government pushed through the Omnibus law in November 2020, which aims to improve Indonesia’s competitiveness and encourage labour-intensive industries’ growth. The global energy crisis also inspired the government to enact a series of controversial policies, including ‘downstreaming’ and the prohibition of raw material exports. These policies have partly contributed to increasing exports of nickel derivatives between 2011–2022 and stimulated economic growth in regional provinces. In anticipating the sudden global dollar liquidity crunch, the central bank has intensified efforts to proliferate local currency settlements (LCS) — a program that encourages using local currencies to settle bilateral transactions — with Indonesia’s main trade partners. Its efforts have significantly increased its monthly LCS usage. The central bank has also sought to reduce Indonesia’s reliance on foreign service providers by launching a new national credit card gateway. Bank Indonesia has also embraced digitalisation. The Indonesian QR standard has become widely available, logging over 24 million merchants and daily transactions of more than US$800 million. It has enabled millions of informal sector vendors to interact with the mainstream financial system via Indonesia’s growing digital banking industry. This could be a potential goldmine for the government to increase fiscal policy effectiveness. Indonesia has taken advantage of the COVID-19 pandemic and undergone fundamental reforms to address its previous flaws. Its job now is to finish implementing those ‘structural reforms’ by enhancing the ease of doing business, reducing investment barriers and improving labour productivity and financial inclusion.   Source : https://www.eastasiaforum.org/2023/05/22/covid-19-sparks-economic-reform-in-indonesia/