Indonesia exports woes intensify

Foreign ownership of government bonds also dipped to 28.5% from 35% total outstanding bonds.

According to OCBC, concerns over the deterioration in exports growth seem to have been relatively more intense in Indonesia. In particular, it is interesting to note that as of June 2012, foreign ownership of government bonds in Indonesia has slipped significantly from about 35% of total outstanding bonds to about 28.5% currently.

Here's more from OCBC:

Among other factors, the extent of moderation is a clear answer to this disparity, especially if we consider that Indonesia is currently running a trade deficit for a second consecutive month, the first time we have back-to-back trade deficit stretching back to the early 1980s (when trade data is made available).

Secondly, the introduction of export tax on various commodities has been a factor that weighed on Indonesia’s exports growth in recent months and given the small likelihood that we are going to witness a u-turn in the government’s policy, we expect little recovery in Indonesia’s exports growth in the coming months.

Lastly, about 40% of formal employment in Indonesia is concentrated in agriculture and mining. Presumably, the income effect from dwindling commodity export earnings would be significant in Indonesia.