Omnibus Law on Job Creation is a now-passed law pushing reforms on numerous regulations to attract investment in order to create more jobs.
Bank Indonesia (BI) held its benchmark interest rate at 4.0% or unchanged from its previous level since Jul-20. The unchanged rate is in linewith our and consensus expectations.
The JCI dropped by 7.0% in September to 4,870 level , in-line with global markets that were in a sea of red led by the slump in US stocks and profit taking activities.
Trade surplus narrowed from USD3.26 bn in Jul-20 to USD2.37 bn in Aug-20. The surplus is lower than our estimation at USD2.94 bn but higher than consensus estimates at USD2.17 bn.
Statistics Indonesia (BPS) recorded deflation at 0.05% MoM although in yearly basis the inflation still occured at 1.32% YoY in Aug-20.
Jul-20 trade surplus was recorded as the second highest surplus at USD3.26 bn from the highest surplus at USD3.57 bn in Aug-11.
Lower inflation, bigger trade surplus and narrowing current account deficit (CAD) provide BI room to have a rate cut but we believe maintaining the rate unchanged is wise until the demand side is able to respond it better.
Dip in Indonesia economy has just been registered in 2Q20 at its sharpest pace since 1999 where in 1Q99 it grew by -6.13% YoY right after Asian Financial Crisis and political turmoil in 1998.
The low era of inflation is associated with current unusual situation where households tend to save more in order to avoid uncertainty in the near future due to the pandemic.