Indonesia Reports Solid External Resilience Despite 6.4 Billion USD BOP Deficit
Indonesia’s balance of payments (BOP) maintained a generally solid position during the third quarter of 2025, even with the period concluding with a 6.4 billion USD BOP deficit, as officially reported by Bank Indonesia (BI) on Thursday.
The central bank emphasized that the country continues to hold exceptionally strong external buffers, with foreign exchange reserves hitting a significant high of 148.7 billion USD at the end of September.
This substantial reserve level is equivalent to a robust six months of imports and government external debt servicing needs.
This metric exceeds international adequacy standards and provides a strong defense against potential external shocks.
Ramdan Denny Prakoso, the Executive Director of Bank Indonesia’s Communication Department, affirmed the overall health of the nation’s external accounts, stating, “Indonesia’s balance of payments performance in Q3 2025 remained healthy.”
The current account, a key component of the BOP, saw a notable and positive swing, moving into a 4.0 billion USD surplus, which equates to 1.1 percent of the Gross Domestic Product (GDP).
This marks a significant reversal from the 2.7 billion USD deficit recorded in the preceding quarter.
This sharp improvement was primarily underpinned by the resilient strength of the non-oil and gas trade balance and a substantial recovery in the services sector.
This was greatly assisted by a marked jump in foreign tourist arrivals into Indonesia, indicating a recovery in international travel receipts.
Current Account Reversal Offsets Capital Outflows in the BOP
The reversal in the current account was driven by several factors beyond just tourism and non-oil and gas trade.
Bank Indonesia also reported a narrower deficit in the primary income account, which largely resulted from lower payments related to dividends and interest after the typical peak distribution period for Indonesian companies passed.
This decline in profit repatriation and interest expense helped mitigate some of the pressure on the overall BOP.
However, the oil and gas balance continued to be a persistent point of weakness, remaining under pressure throughout the quarter as global crude oil prices steadily climbed, increasing the cost of energy imports for the resource-consuming economy.
On the capital and financial account side of the BOP, conditions were characterized by relative stability despite the prevailing uncertainty in global financial markets, with investors navigating complex monetary policy signals from major economies.
Direct investment provided a crucial positive counterbalance, booking a significant surplus that clearly reflects sustained and robust investor confidence in Indonesia’s long-term economic outlook and reform agenda.
Conversely, the portfolio flows segment, which is highly sensitive to short-term market sentiment and yield differentials, recorded net outflows.
Furthermore, other investments, another segment of the capital account, slipped into a deficit primarily due to a rise in private sector external loan repayments, as companies sought to reduce foreign currency liabilities.
Overall, the capital and financial account segment of the BOP posted an 8.1 billion USD deficit in the third quarter, making the current account surplus a necessary stabilizing force.
Central Bank’s Proactive Policy Response and Outlook for External Resilience
In light of the recorded BOP deficit and the mixed capital account performance, Bank Indonesia has reiterated its commitment to closely monitoring evolving global economic developments while simultaneously strengthening its comprehensive policy mix.
This response is being implemented in careful coordination with the government and other relevant financial authorities to ensure a unified and effective defense of external stability.
Executive Director Ramdan stated that BI will continue to observe global dynamics that possess the potential to affect the future balance of payments outlook and will reinforce its policy response as necessary to safeguard the country’s external resilience.
For the full year, the central bank maintains an optimistic projection, expecting the nation’s balance of payments to remain robust and highly resilient.
This favorable full-year outlook is underpinned by the expected continuation of a sustained non-oil and gas trade surplus, which provides a reliable source of foreign exchange earnings.
It is also supported by continued strong foreign direct investment inflows, which demonstrate long-term confidence in the Indonesian Economy.
The strategic combination of these external buffers, particularly the high level of foreign reserves and the structural current account improvement driven by trade and tourism, positions Indonesia favorably to absorb external volatility and manage capital flow fluctuations in the immediate future, despite the quarterly BOP deficit reported.
Regional Implications of Indonesia’s BOP Dynamics and Policy Autonomy
The 6.4 billion USD BOP deficit in Q3, driven primarily by the 8.1 billion USD capital account deficit, underscores the sensitivity of Indonesian assets to global monetary tightening, despite a strong current account.
The notable portfolio flow outflow reflects the high correlation between US Treasury yields and emerging market debt, posing a persistent challenge to Bank Indonesia’s policy autonomy.
However, the current account’s swift swing back to a 4.0 billion USD surplus (1.1% of GDP) is the crucial differentiator for Indonesia within the ASEAN region.
This is a key advantage, as several peers (e.g., Vietnam, Philippines) are battling persistent trade deficits.
This structural resilience, heavily reliant on commodity exports and a recovering tourism sector, provides BI with the necessary ammunition (the 148.7 billion USD in reserves) to manage Rupiah volatility without resorting to excessive interest rate hikes, unlike prior periods of market stress.
The key Investment takeaway is the defensive strength provided by the Current Account surplus, which mitigates the risk of a severe currency crisis, even as the global environment pressures the Capital Account.
This balance differentiates the Indonesian Economy from its regional counterparts, allowing it to attract longer-term Foreign Direct Investment (FDI) focused on the structural growth sectors cited by Danantara, rather than relying solely on volatile portfolio flows.
The stability demonstrated by the current account is a compelling factor for global asset allocators, suggesting Indonesia remains a preferred destination despite short-term BOP deficit figures.
