In Q3 2024, Indonesia's Balance of Payments (NPI) showed a remarkable improvement, marking a surplus of $5.9 billion. This is a significant turnaround from the $0.6 billion deficit seen in the previous quarter (Q2 2024). The surplus was largely driven by an increase in the capital and financial account surplus, which more than offset the lower deficit in the current account balance. This improvement in the overall NPI performance has strengthened Indonesia's external economic resilience.

The current account deficit narrowed in Q3 2024 to $2.2 billion, representing 0.6% of GDP, down from the $3.2 billion deficit, or 0.9% of GDP, recorded in Q2 2024. A key factor supporting the current account was the continued surplus in the non-oil and gas trade balance. Indonesia's export growth, bolstered by rising commodity prices, played a central role, even though imports also grew due to increased domestic economic activity. Additionally, the service balance deficit shrank as the surplus in travel services expanded, driven by the growing number of international tourists visiting Indonesia.

Another positive contributor to the current account was the reduction in the deficit in the primary income account, mainly due to lower investment income payments to foreign investors. The secondary income account also saw an increase in its surplus, largely from higher remittance inflows, which further supported the overall performance of the current account.

In parallel, the capital and financial account maintained a strong surplus of $6.6 billion in Q3 2024, up from $3.0 billion in the previous quarter. This positive trend was led by an increase in foreign direct investment (FDI), particularly in sectors such as manufacturing, healthcare, and transportation, logistics, and communications. Investor sentiment towards Indonesia's economic outlook remained positive, which boosted capital inflows. Moreover, portfolio investment flows also grew, driven by attractive investment returns in Indonesia.

Despite the overall positive trends, there was an increase in the deficit of other investments, primarily due to higher private sector placements in foreign financial instruments. However, the gains from FDI and portfolio investments helped offset this increase, maintaining the surplus in the capital and financial account.

Looking ahead, Bank Indonesia continues to closely monitor global economic dynamics that could impact the prospects of Indonesia's NPI. The central bank remains committed to strengthening its policy mix and ensuring strong coordination with the government and relevant authorities to maintain external sector resilience. For 2024, Indonesia's current account deficit is expected to remain low, ranging from 0.1% to 0.9% of GDP, while the capital and financial account is anticipated to maintain its surplus, supported by continued growth in both direct and portfolio investments.

With a robust external position, bolstered by the continued inflow of investment and favorable trade dynamics, Indonesia is on track to maintain economic stability and continue its growth trajectory as it looks ahead to the future. The improvement in the balance of payments is a testament to the country’s strong fundamentals and positive investor outlook.