Update COVID-19 in Indonesia: 1,298,608 confirmed infections, 35,014 deaths (23 February 2021)
23 February 2021 (closed)
USD/IDR (14,146) -6.00 -0.04%
EUR/IDR (17,335) +57.05 +0.33%
Jakarta Composite Index (6,272.81) +17.50 +0.28%
The risky decision of Indonesia’s central government and regional governments to (gradually) ease the various self-imposed social and business restrictions (that had been imposed in April 2020) has caused changes in economic activity in Indonesia, particularly in consumer behavior, starting from June 2020.
With various businesses being allowed to reopen their doors in the so-called ‘new normal’, consumption has room to recover. For example, shopping malls in Jakarta are again welcoming many urban dwellers (including for non-essential activities), albeit matters are not like in the ‘old normal’. For example, shopping malls are only allowed to operate at 50 percent capacity, while cinemas – often located in shopping malls – remain closed. Meanwhile, various hygiene and health protocols need to be complied with by the management of the shopping mall as well as the malls’ tenants and visitors. Moreover, shopping malls’ operating hours remain limited.
But despite the still tough circumstances, easing restrictions do allow some room for an increase in (household) consumption. Whereas in the April-May 2020 period, the shopping malls could only be visited for essential matters (such as the supermarkets and pharmacies, or takeaway meals), people can now again enjoy a meal or a cup of coffee (or bubble tea) in one of the many restaurants and cafés inside the shopping malls.
It is interesting to take a look at whether the latest data can confirm that the easing restrictions lead to a rebound in economic activity. For instance, Bank Indonesia’s latest retail sales survey. The chart below shows that retail sales have contracted at an accelerating pace since January 2020, hitting the bottom in May 2020, with a 20.6 percent (y/y) contraction when social and business restrictions in Indonesia were most strict. The June 2020 retail sales survey results will be released in the second week of July 2020 and can therefore not be included in this report. However, the survey of Indonesia’s central bank does predict that the contraction in the country’s retail sales will ease to -14.4 percent (y/y) in June 2020 as household consumption recovers slightly amid easing restrictions: a modest recovery.
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