JAKARTA - Indonesia's financial system stability in the first semester of 2021 will be maintained, although it is still overshadowed by the development of the Covid-19 case. This is indicated by the Financial System Stability Index (ISSK) which is maintained in the normal zone and the Financial System Vulnerability Index (IKSK) which is improving. The start of the vaccination program in early 2021, which was followed by a decrease in Covid-19 cases and increased mobility, supported Indonesia's economic recovery.
Banking intermediation recorded positive growth although not yet strong, driven by financing demand which began to increase in line with improving corporate and household (RT) performance. During the first semester of 2021, credit grew slowly until it managed to reach a positive number of 0.59% (yoy) at the end of the semester.
"Entering the second semester of 2021, Indonesia's financial system stability is predicted to be maintained, although there are still a number of challenges that need to be watched out for," explained Muhamad Nur, Group Head of the Communications Department of Bank Indonesia.
Financial system resilience is predicted to remain under control, while intermediation will continue to be encouraged. Bank Indonesia predicts credit growth in 2021 at 4% - 6% and growth in Third Party Funds (DPK) at 6% - 8%. The forecast for credit disbursement in 2021 is supported by optimism about monetary and economic conditions, as well as relatively subdued credit disbursement risk.
However, a number of challenges still need to be watched out for, including the Fed's tapering policy plan. Bank Indonesia will continue to monitor the dynamics of the economy and the development of the spread of Covid-19 in formulating the necessary further policy steps. (LM)