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Jakarta Post

Banking update: Strategy to support economic recovery

  • Rully Arya Wisnubroto

    Jakarta

Jakarta   /   Wed, August 5 2020   /  01:00 am
Top priority: The construction site of an LRT station is seen on Jl. Rasuna Said in South Jakarta on Tuesday. State-owned developer Adhi Karya said it would prioritize several infrastructure projects amid the COVID-19 pandemic.(JP/R. Berto Wedhatama)

At the time I started writing this article, we were still waiting for the release of second-quarter GDP data scheduled to be announced Wednesday. The economy experienced a sharp slowdown in the first quarter of this year to growth of 2.97 percent year-on-year (yoy), from 4.97 percent in the preceding quarter. It is almost certain that Indonesia experienced a negative year-over-year growth in the second quarter due to the social distancing policy to curb the COVID-19 pandemic. Many of the latest macroeconomic indicators suggest that we will have a sharp contraction in the last quarter. Tax revenue in June contracted by more than 9.3 percent. At the same time, motor vehicle sales, cement consumption and capital goods imports contracted by staggering numbers of 86 percent, 57 percent and 36 percent yoy, respectively. Based on those numbers, we predict a second-quarter domestic GDP contra...