Covid-19 is not only affected the supply side but also the demand side. In that case, a global economic contraction could become inevitable.
Due to the COVID-19 outbreak, Bank Indonesia (BI) decided to cut its BI 7-Day Reverse Repo Rate (BI-7DRRR).
According to Indonesia Statistic Office (BPS), the country had always recorded trade deficit in every January within the last three years.
Economic slowdown is unavoidable since Indonesia’s economy is susceptible with the global economic downturn.
It is very uncommon for Indonesia to have a relatively low Inflation in the beginning of the year where the last January inflation that under 3% in yearly basis was in 2019.
Dec-19 is the only month which successfully recorded positive growth on export within 2019 and the first increase in exports since Oct-18. The data completed the overall 2019 trade performance where the deficit was due to the deficit from oil and gas (OG) sector.
The reason of the unchanged rate is because BI expects better macroeconomic indicators coming in 4Q19 ahead such as slight global economic growth recovery, stronger consumption approaching the year end, appreciation trend of the currency and the relatively low inflation.
The increase in imports of consumer goods surged approaching year-end holidays whereas exports shrunk for 13rd straight month since Nov-18.