JAKARTA - The results of the Bank Indonesia Board of Governors' Meeting (RDG) on 15-16 July 2020 predicted that national economic growth in the second quarter of 2020 experienced a contraction, with the lowest level recorded in May 2020.
This development was influenced by the contraction of the domestic economy in April-May 2020 in line with the impact of the Large-Scale Social Restrictions (PSBB) policy to prevent the spread of the COVID-19 pandemic which reduced economic activity. The latest developments in June 2020 show that the economy has begun to improve in line with the relaxation of the PSBB, although it has not yet returned to pre-COVID-19 levels.
Some early indicators of domestic demand show this positive development, as reflected in retail sales, Purchasing Manager Index, consumer expectations, and various other domestic indicators, which have begun to increase. The June 2020 export performance of several commodities such as iron and steel also improved along with the increasing demand from China for infrastructure projects.
Going forward, the acceleration of domestic economic recovery is expected to improve with the pace of absorption of fiscal stimulus, the success of restructuring credit and corporations, the use of digitalization in economic activities, including MSME activities, and the effectiveness of the implementation of the COVID-19 health protocol in the new normal era. Bank Indonesia, through its policy mix, will continue to strengthen synergies with the Government and related authorities so that various policies pursued will be more effective in encouraging economic recovery. (LM)