Industrialization as a key strategy for Indonesia's trade surplus in times of slowdown

Indonesia’s economy faces increasing challenges in maintaining its competitive position in international trade. Economists from UOB, Enrico Tanuwidjaja and Vincentiusz Ming Shen, warn that the accumulated demand from previous years is gradually depleting, and the outlook for early 2026 is clouded by both slowing economic growth and rising trade tensions on the global stage.

Slowing Growth and Trade Tensions Undermine Outlook

Indonesia’s trade situation is changing dynamically. Key risk factors include declining consumer demand, uncertainty in global markets, and escalating trade conflicts among major economic partners. This combination poses threats to long-term export growth, which has so far been a driving force behind the country’s trade surplus.

Financial Forecast: Significant Reduction in Deficit

UOB Institute has forecasted that Indonesia’s trade surplus will decrease from $41 billion last year to around $35 billion this year. The decline is primarily due to a slowdown in export growth, alongside ongoing imports of capital goods necessary for infrastructure modernization. According to Jin10, although new opportunities arise from the comprehensive economic partnership agreement with the European Union, trade agreements alone will not be enough to sustain current momentum.

Industrialization and Diversification as Essential Solutions

UOB experts emphasize that to maintain the growth rate of the trade surplus, Indonesia must invest further in industrialization, especially in high-tech sectors and lower-value manufacturing chains. Downstream industrialization, involving the development of processing and higher-margin production, is absolutely crucial for improving competitiveness. At the same time, diversifying trading partners and expanding into new markets can reduce dependence on traditional export destinations and better protect the economy from external shocks. Therefore, coordinated strategies are needed not only in international trade but also in industrialization and economic modernization policies to ensure a stable trade future.