* 2023 c/a deficit at 0.1% of GDP, vs 2022 c/a surplus at 1%
* 2023 BoP surplus rises to $6.3 bln, vs $4 bln surplus in 2022
* Q4 c/a deficit widens to 0.4% of GDP, vs 0.3% deficit in Q3
JAKARTA, Feb 22 (Reuters) - Indonesia's current account swung to a deficit in 2023 as weakening global demand weighed on merchandise exports, bolstering expectations that Bank Indonesia will keep its key interest rate unchanged for a while longer this year.
A weaker current account balance could affect Indonesia's rupiah and aggravate imported inflation, which are major considerations for BI's policy rate decisions.
Southeast Asia's largest economy recorded a $1.6 billion current account deficit last year, or 0.1% of gross domestic product, compared with a surplus of 1% of GDP in 2022, which had been fuelled by a global commodity boom, the central bank's data showed on Thursday.
The nation's balance of payments surplus widened $2.3 billion to $6.3 billion in 2023 from previous year, mainly supported by the strong performance of the financial and capital accounts amid returning foreign inflows following subdued global financial uncertainty, BI said.
In the fourth quarter of last year, Indonesia's current account deficit widened to $1.3 billion, equivalent to 0.4% of GDP, from the previous three months, while its balance of payments was at $8.6 billion surplus.
The latest data meant 2022 was Indonesia's only year of booking a current account surplus in the past 12 years.
Economists often cite the frequent deficits as one of Indonesia's main weaknesses as the country typically relies on portfolio inflows to plug the gap.
BI forecast a current account deficit between 0.1% to 0.9% of GDP this year.
"Considering the potential increase in the current account deficit this year, we see BI to have tendency of maintaining its benchmark interest rate in the short term and will only have room to reduce it in the second semester," said Josua Pardede, chief economist at Bank Permata.
Pardede estimated 2024's current account deficit would be around 0.7% of GDP due to economic slowdown in its major trading partner China and weaker prices of its top export commodities, like coal and palm oil.
BI on Wednesday left its benchmark policy rate at 6.00%, where it has been since October, saying current levels were consistent with efforts to keep the rupiah stable and inflation in check.
Governor Perry Warjiyo
reiterated
after the policy meeting that the bank would likely have room to cut borrowing costs in the second half of the year. (Reporting by Stefanno Sulaiman; Editing by Kanupriya Kapoor and Kim Coghill)
