Food Import Policy: A Two-Edged Sword

A surge in food imports caused the highest trade deficit of President Joko’s government. This could have a knock-on effect on the weakening rupiah and economic growth.

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Unloading of imported rice from Vietnam at Tanjung Wangi Port, Banyuwangi, East Java, 23 February 2018. | Budi Candra Setya | ANTARAFOTO

The government’s effort to lower inflation by importing food has ultimately had a negative effect on the economy. Trade balance in April 2018 was in substantial deficit due to growing imports, including imports of consumer goods and food. If this continues, it could have a further weaken the rupiah and put the brakes on economic growth.

On Tuesday (15/5), the Central Statistics Agency (BPS) announced that Indonesia’s trade deficit in April was US$ 1.63 billion, the highest since May 2014 or during the administration of President Joko Widodo. In March, the trade balance was in surplus US$ 1.09 billion, following deficits in the first two months of the year.

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