Bank Indonesia (BI) Governor Perry Warjiyo said the central bank had recorded a narrowing trend in the current account deficit, which was recorded at 3.57 percent of gross domestic product (GDP) in the fourth quarter of 2018.
“Thus, the current account deficit is heading toward 2.5 percent of GDP this year,” he said in Jakarta on Tuesday as quoted by tempo.co.id.
BI plans to announce the current account deficit for the first quarter of 2019 in May. Last year’s deficit swelled on account of poor trade performance and external pressure against the rupiah, which had forced BI to carry out intensive intervention.
The current account deficit along 2018 was recorded at 2.98 percent of GDP from 1.7 percent of GDP in 2017.
Previously, BI deputy governor Dody Budi Waluyo expressed his optimism that capital inflow would be able to narrow the balance of payment deficit, which was recorded at US$7.13 billion in 2018.
The balance of payment deficit widened in 2018 on account of continuous external pressure on the financial market marked by small capital inflow in the first to third quarter of 2018.
“But our aim to maintain an attractive investment climate has managed to attract investment back to the domestic market,” he said in early February, adding that it was indicated by the capital and financial transactions in the fourth quarter of 2018.
It was also marked by the strengthening of the rupiah exchange rate, he added. (bbn).