Indonesia's economy shows a decelerated pace in Q2, marking the first time since the 1997 Asian crisis. The pace is caused by partial lockdowns in areas throughout the archipelago that disrupt business activities. On Wednesday, August 5, The Indonesian Central Agency of Statistics (BPS) released a report that the country’s economy is slowing down by -5.32% throughout the month of April to June. The pandemic-curbing restrictions also interrupted household spending, resulting in the sluggish consumption and lowered it by -5.51%, while at the same time, foreign direct investments and exports also depreciated. Consumption accounts for more than 50% of the country’s GDP growth and major exports are commodities like crude palm oil and coal. The country’s retail and manufacturing sales has also been dampened by the pandemic, as government and central bank data shows.
The government has launched a 695.2 trillion rupiah (approximately 47.54 billion U.S. dollars) worth of stimulus packages to cushion the pandemic impact, piling the deficit higher in the state development budget to a 6.34%. The central bank, Bank Indonesia, already trimmed a total of 100 basis points of its key rate, resulting in a 4.0% rate. The central bank also agreed to purchase billions of U.S dollars in government’s sovereign bonds to fill the deficit.
The efforts to boost the economy as the social restrictions eased in June and business activities resumed in hope that the recovery would be seen in the third quarter to dodged a deep recession this year. The GDP forecast also has slashed with the expectation of -0.4% to 1% this year made by the government, while the central bank predicted between 0.9% to 1.9% growth. The authorities had also been ordered by President Joko Widodo to raise the capital spending in all the 34 provinces to help decelerate the economic downturn. Indonesian daily positive cases are still gradually increasing, with around 1,500 to 1,900 positive cases confirmed per day since August 1.
