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Bank Indonesia Monthly Report September 2020

NEWS | 9 October 2020
Indonesia has seen the decline to the homegrown economy as a report of the third quarter of 2020 found a possibility of a recession but the Archipelago nation saw improvement in export. NOW!JAKARTA

Global Economy

The Global Economy is starting to rebound, with economic gains in China and United States during global improvements. Economies in Europe, Japan and India languish. Some only indicators were favourable : increasing mobility , expanding manufacturing and a rise in consumption all positive. World Trade volume and international commodity prices increased in the second semester, but there is still high uncertainty in global financial markets, with eroded capital flows to developing economies and continued currency pressures in developing countries.

Domestic Economy

This is also recovering albait on line with public mobility in August 2020. Export performance improved on higher global demand for iron - steel, pulp and waste paper as well as crude palm oil.

Household consumption recorded limited gains in live with ongoing fiscal stimuli in the form of social aid program disbusements and the THR payments for civil servants.

Indonesia’s Balance of Payments

External sector resifiance remained solid in the third quarter of 2020 despite a rebalancing of foreign capital inflows in domestic financial markets during September  The current Account Balance deficit narrowed with export continuing to rise and lower imports on compressed consumer demand.

The trade balance was in surplus of US$ 2.33b for the month of August, leaving foreign exchange revenues at US$ 137b equal to 9.4 months of imports.

Inflation

This remained low on weak domestic demand and adequate supply.

Consumer Price Index Inflation was - 0.05% (month to month) and 1.32% (year on year).

Volatile Foods Inflation remained negative at - 1.44% (month to month) and - 1.09% (year on year).

Exchange Rate

Consistent with BI’s stabilization measures the rapid exchange rates have remained relatively stable despite intense currency pressures in August and September, with the rupiah losing value against the dollar due to market uncertainty and domestic risks but BI expects the rupiah to regain value as it remains relatively undervalued.  

Synergy to drive the National Economy Recovery

BI continues to strengthen synergic monetary expansion though the acceleration of fiscal stimuli, funding primary markets and private placements.

Funds committed to mechanisms from Ministry of Finance and BI amounted to Rp. 45.03 trillion, and fuds for mechanisms from July decrees were Rp. 99.08 trillion to fund public goods and Rp. 44.38 trillion for burden sharing with the government on SME support.

Interest Rates

The Governors decided to hold their rates at 4.0% for BI - 7 day reverse repo, 3.25% for Deposit Facility and 4.75% for Lending Facility.

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