March 15, 2016 / 5:56 AM / 4 years ago

UPDATE 1-Indonesia Feb trade surplus tops $1 bln as exports higher than forecast

* Trade balance $1.14 bln vs $80 mln in poll

* Feb exports -7.18 pct y/y, vs -14.70 pct in poll

* Export contraction is the smallest since Oct 2014

* Feb imports -11.71 pct y/y, vs -10.70 pct in poll

By Nilufar Rizki and Gayatri Suroyo

JAKARTA, March 15 (Reuters) - Indonesia produced its largest trade surplus in seven months in February, as exports declined at the slowest annual pace since October 2014.

The February surplus was $1.14 billion, far larger than the $80 million median in a Reuters poll.

Southeast Asia’s largest economy, which mainly exports commodities, has long been struggling with weak prices for its main products such as coal, palm oil and tin as well as oil and gas.

In February, exports contracted for the 17th straight month. falling 7.8 percent from a year earlier to $11.30 billion, data from the statistics bureau showed. A Reuters poll had projected a drop of 14.7 percent.

Suryamin, the head of the statistics bureau, said shipments of some of Indonesia’s key products including palm oil rose on a monthly basis, while exports of wood products and copra grew on a yearly basis.

February imports, however, were slightly weaker than the poll forecast. They declined 11.71 percent from a year earlier to $10.16 billion, compared with the poll’s -10.70 percent median.

IMPORT STORY UNCHANGED

Economists hesitated to see any trend of improvement in trade from the February numbers alone.

The better-than-expected February export earnings were “mostly because of rising exports of raw materials like copra”, said Aldian Taloputra, senior economist at Standard Chartered in Jakarta.

“The story in imports hasn’t changed much,” he said, noting that those of capital goods appear to still be weak.

Taloputra said that this weakness should strengthen the case for Bank Indonesia (BI) to cut its benchmark rate again at a meeting on Thursday.

A Reuters poll showed that 13 of 22 analysts expect a cut of 25 basis points to 6.75 percent. Cuts of the same size were made in January and February.

In 2015, Indonesia had a $7.6 billion trade surplus, its first one after three years of deficits, largely due to falls in imports as consumption waned and investment weakened.

Economic growth in 2015 was 4.8 percent, the slowest since 2009.

The central bank has said it expects a wider gap in the current account deficit this year stemming from a smaller trade surplus.

BI Senior Deputy Governor Mirza Adityaswara said on Friday a recovery in Indonesia’s exports this year is contingent on there being improvements in the global economy that push up commodity prices.

Editing by Richard Borsuk

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