Investigating the current account balance movement of Indonesia

Indonesia as one of the largest emerging market in Southeast Asian has continuously received attention from the global market. However, despite its optimistic economic growth, the country still experiences a deteriorating current account balance in the recent years. This study aspires to investigate the important factors which could explain this long-term weakness in Indonesia’s current account balance, with the sub-objective being to explain the period of relative strength in the current account balance from 1998-2003. The research uses two approach from monetarist and structuralist. In order to support the analysis, this paper use several secondary data from Government and International Organizations. The study finds that trade account possessed a vital role of the overall current account balance. But in some period, especially in the weakness period of current, the primary income surpasses the trade balance.