Indonesia’s Situation More Dire Than India

The whipping boys of emerging Asian markets in recent times – Indonesia and India – have their fair share of problems, but analysts are singling out Southeast Asia’s biggest economy as the one in a more precarious position.

While both countries have wide current account deficits, analysts argue that Indonesia’s external situation is worse as the economy has moved quickly from a current account surplus just a couple of years ago into a hefty deficit.

Indonesia’s current account deficit widened to 4.4 percent of gross domestic product (GDP), or $9.8 billion, in the second quarter, compared with 2.6 percent of GDP in the previous quarter. In 2011, it recorded a current account surplus of $1.7 billion.
By contrast, India’s improving current account deficit is expected to narrow considerably over the coming months led by a decline in non-oil imports and a rise in exports and remittance flows. Barclays forecasts the current account deficit will shrink to 3.7 percent of GDP, or $68.2 billion, from 4.8 percent last year.

CNBC

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