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Textile exports drop in the midst of US slowdown & inflation
04
Jun '08
A slow down in global economy has had a direct effect on Indonesian exports which dropped considerably in the first quarter of 2008 with regards to US and Japan who account for being its largest markets.

Exports to United States, for January-March declined by 0.38 percent to US $1.11 billion against $1.12 billion in the same period of 2007 when it emerged as the largest consumer of Indonesian exports.

This is mainly because US cut down its textile imports from all over the world during this period from $22 billion in 2007 to $21 billion this year.

Exports to Japan also slipped due to effects of US slow down by 3.5 percent during the period to touch $142.2 million. However, experts believe that Japanese market has a bright future prospect once the Indonesia-Japan Economic Agreement comes into force by this June.

This agreement sanctioned in August last year was contracted with the objective of facilitating bilateral trade and investment relations. Once in effect, Japanese and Indonesian fabrics will be allowed transaction with zero percent tariffs in both countries.

Surprisingly, despite low demand from US and Japan, the total amount of exports from Indonesia saw a surge of 5.3 percent to $2.58 billion in the first quarter of this year against $2.45 billion in the same period of 2007. This was largely due to higher demands from other countries including Europe.

In contrast, domestic consumption also dropped because of soaring inflation to result in a plummet in sales by 27 percent to $160 million due to weakened purchasing power.

Directing its exports to European markets is probably one of the best policies for the Indonesian textile industry whose imports from other countries have soared by 19 percent in the first quarter to reach $1.22 billion.

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