By Andreas Ismar
JAKARTA--Indonesia's current account deficit widened to 4.4% of gross domestic product in the second quarter compared with 2.6% in the previous quarter, the central bank said Friday.
In nominal terms, the current account deficit reached $9.8 billion in the April-June period, compared with a revised deficit of $5.8 billion in the first quarter.
Bank Indonesia said the wider deficit was caused by higher imports, falling export proceeds amid a slump in commodity prices, and increasing overseas travel by Indonesians during the school holiday season. Overseas payments also increased, while the oil and gas balance, although narrower, remained in deficit, the central bank said.
The capital and financial account was in a surplus of $8.2 billion in the second quarter, compared with a revised $0.3 billion deficit in the previous quarter.
"Policy mix by Bank Indonesia, supported with government policies, have succeeded in lowering the negative impact of souring global economic and financial conditions," central bank governor Agus Martowardojo said in a statement.
Indonesia's balance of payments deficit narrowed to $2.5 billion in the three months ended June compared with a deficit of $6.6 billion. The country's foreign exchange reserves of $98.1 billion at the end of June was equal to 5.4 months worth of imports and foreign debt payments, according to the central bank.
Bank Indonesia added that based on seasonal patterns, the current account deficit in the third quarter "will be much lower" than that of the second quarter. On top of that, commodity prices are expected to improve, supporting exports, while a depreciating rupiah will likely curb import growth.
Concerns over a widening current account deficit has negatively affected the local currency. The rupiah has fallen about 7.5% against the dollar so far this year, making it among the worst performing Asian currencies.
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