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

Several countries, including Indonesia, started to reopen their economies and relax their pandemic containment measures as the efforts to recover from its COVID-19 breakdown.  Even though the pandemic peak and settlement are still uncertain, Indonesia has decided to gradually revive the economy by loosening the large-scale social restrictions (PSBB) towards the “new normal”. To date, the pandemic has hit all aspects of the economy due to the global supply chain disruption and weakening demand. Substantial deterioration in consumptions and investments is undeniable. In addition, Indonesia’s exports significantly dropped while imports plummeted at a higher pace; reflecting a gloomier outlook of the economy in the near future as a collapse in imports, which mainly consist of raw materials and capital goods, signalling a real sector contraction. Besides, inflation remains low and stable as weakening aggregate demand beat the limited cost-push inflation.

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