What is highly related to unemployment and poverty is economic growth. After all, when economic growth is not high enough, there will not be enough job creation, hence people will encounter major difficulties finding a job, and thus trouble escaping poverty. Even worse, when the economy collapses (as we are witnessing in the world today because of the COVID-19 crisis), then many people lose their jobs. Considering there are many millions of people in Indonesia who live just above the poverty threshold, mass job losses would push millions of Indonesians into full-blown poverty.

In early May 2020, Statistics Indonesia announced Indonesia's Q1-2020 economic growth rate (which is discussed in detail in the May 2020 edition). The outcome was a bit shocking: growth of 2.97 percent year-on-year (y/y) in Q1-2020, about 1 percent below our forecast. But the worst is yet to come: if Indonesia's economic growth is already highly affected by relatively mild anti-COVID-19 policy measures in Q1-2020, then what will be the damage in the second quarter when very restrictive and far-reaching policy measures completely disrupt business and household consumption (possibly throughout the quarter)?

In the May 2020 report we also discuss the usual macroeconomic updates. Manufacturing activity in Indonesia, for example, continued to contract at an alarming rate. Meanwhile, inflation was extraordinarily mild amid the Ramadan and Idul Fitri celebrations as consumption is low. What is positive though is that the Indonesian rupiah continued to strengthen significantly against the US dollar, indicating that investors are showing some risk-appetite again (reflected by inflows into Indonesian sovereign debt).

To see all topics that are discussed in our May 2020 edition, please check the table of contents that are available below.

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