MACROECONOMIC ANALYSIS SERIES: BI Board of Governor Meeting, July 2020

As the end of the pandemic seems nowhere in the near future, the government has been put in an extremely rough situation as business activity has been in halt for several months and through the large-scale social restrictions (PSBB) has enforced some groups of people to earn less. The condition is costly for the government as it has to provide social benefits and several other stimulus to cushion people by safeguarding their basic needs and to prevent firms from being bankrupted. While the escalation of Covid-19 is getting worse in terms of its spread, the government has tried to reach a middle ground by applying the “new normal” protocol in order to stimulate economic activity without significantly jeopardizing the health and safety aspects of the population. Regardless, the impact of increasing economic activity has not been reflected yet in June’s inflation data.

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