BANK INDONESIA'S
ANNUAL MEETING 2020
BANK INDONESIA'S
ANNUAL MEETING 2020
BANK INDONESIA'S
ANNUAL MEETING 2020
TABLE OF CONTENT
Global Economic Performance and Prospects: Recovery
Underway, Financial Market Uncertainty Eases 7
National Economic Performance and Prospects: Recovery Process
Underway, Stability Maintained
12
Bank Indonesia Policy Mix 2020: Strengthening Stability,
Supporting National Economic Recovery 20
• Rupiah Exchange Rate Stabilization Policy 21
• Monetary Policy Stimulus 22
• Monetary Policy Mix and Macroprudential Policy
23
• Implementation of Law No. 2 of 2020: Supporting State
Finances and Financial System Stability
25
• Digitalization of Payment Systems: Accelerating National
Digital Economic and Financial Integration
27
• Money Market Deepening: Effectiveness of Policy
Transmission and Financing
30
• Empowerment of Sharia Economy and Finance, and MSMEs
32
• Strengthening International Policy
36
• Transformation of Bank Indonesia
38
Synergize to Build Optimism for Economic Recovery:
One Prerequisite, Five Principal Strategies
41
Bank Indonesia Policy Mix for 2021: Supporting Optimism for
National Economic Recovery
45
• Monetary Policy Direction
46
• Macroprudential Policy Direction
47
• Payment System Policy Direction
48
• Acceleration of Money Market Deepening
49
• MSMEs Policy and Sharia Economy and Finance
53
• International Policy
53
Moving Forward with Optimism
54
SYNERGIZE
TO BUILD OPTIMISM FOR
ECONOMIC RECOVERY
Speech of the Governor of Bank Indonesia
BANK INDONESIA'S ANNUAL MEETING
Jakarta, 3 December 2020
His Excellency,
• The President of the Republic of Indonesia, Joko Widodo.
Honourable Guests,
• Leaders and Members of the House of Representatives and House of
Regional Representatives of the Republic of Indonesia;
• Leaders of State Institutions;
• Ministers of Indonesia Onward Cabinet (Kabinet Indonesia Maju),
• Chairman and Members of the Board of the Financial Services Authority
(OJK) and Deposit Insurance Corporations (LPS)
• Former Governors and Board members of Bank Indonesia;
• Provincial Governors from all across Indonesia;
• Leaders of the Banking Industry, Corporate Sector and National Media;
• Awardees of 2020 Bank Indonesia Award;
• Distinguished Ladies and Gentlemen,
Assalamualaikum Warahmatullahi Wabarakatuh,
Greetings to everyone, Shalom,
Om Swastyastu, Namo Buddhaya,
Salam Kebajikan.
First of all, let us express our gratitude to the Almighty God, because only with His grace and blessings today
we could gather at this Bank Indonesia Annual Meeting of 2020. With all humility, we would like to extend
our gratitude Mr. President who has been pleased to attend this convocation along with all the invited guests.
We congratulate the banks, corporations, and individuals who received the Bank Indonesia Awards 2020.
A total of 41 awards in 4 areas and 13 categories in the fields of monetary stability and financial system
management, payment systems and Rupiah money management, MSMEs development and sharia economy
and finance, as well as Bank Indonesia policies' supports. This award is held annually, together with the
Annual Meeting of Bank Indonesia, as an appreciation and recognition to partners who have supported the
implementation of Bank Indonesia's tasks.
On this auspicious occasion, allow us to present an evaluation of economic performance in 2020 as well as
the economic prospects and the policy direction of Bank Indonesia for 2021, which we summarize under
the theme "Synergize to Build Optimism for Economic Recovery". In our opinion, this theme is appropriate
to strengthen the momentum for the national economic recovery process. After struggling to cope with
the impact of the COVID-19 pandemic, thanks be to God the Indonesian economy has shown strong
resilience. The worst is over. Stability has been maintained and the process of economic recovery is ongoing.
The synergy of national economic policies is very close, and it is this synergy that we need to continue to
strengthen in the future to build optimism for the national economic recovery. Bank Indonesia has, and
will always, synergize with the Central and Regional Government, the Financial System Stability Committee
(Komite Stabilitas Sistem Keuangan - KSSK), the House of Representatives (Dewan Perwakilan Rakyat - DPR),
the banking sector, the bussinesses, and all parties to jointly build this optimism. God willing, the national
economy will get better and continue to improve towards an Advanced Indonesia in 2045.
We present the presentation in 5 (five) sections, namely: (i) Global economic performance and prospects that
indicate recovery, financial market uncertainty has eased; (ii) National economic performance and prospects
that demonstrate resilience in the recovery process; (iii) Bank Indonesia policy mix for 2020; (iv) Synergy of
national economic policies to build optimism for future economic recovery; and (v) The direction of the Bank
Indonesia policy mix for 2021. Our presentation is at the same time a manifestation of Bank Indonesia's
accountability and transparency as mandated in the Bank Indonesia Act.
Global Economic Performance and The COVID-19 pandemic has an impact on health
Prospects: Recovery Underway, Financial and humanitarian problems around the world.
Market Uncertainty Eases COVID-19, which first appeared in Wuhan, China,
has spread rapidly throughout the world (Graph 1).
The COVID-19 pandemic had an extraordinary Until now, more than 60 million people have tested
impact on humanity, economy and finance worldwide. positive for COVID-19, mostly in the United States
The scale and speed of the spread of the pandemic (US), India, Brazil, and Russia. COVID-19 has also
around the world to 138 countries has far exceeded claimed more than 1.4 million lives (Graph 2). After
previous pandemics (SARS and MERS). This has had an reaching its peak in the second quarter of 2020,
unprecedented impact on health and humanity with additional cases and mortality rates began to slightly
more than 60 million people testing positive and 1.4 subside. However, the risk of a COVID-19 second or
million died from COVID-19. The impact on human even third wave pandemic is the focus of attention in
mobility and world economic and financial activities various countries. Meanwhile, vaccine development
has been unparalleled. The COVID-19 pandemic has is continuing with a number of successful trials
caused a worldwide economic recession and in many and ready to be administered in stages estarting in
countries, financial market panic and uncertainty, as December 2020. It is likely that vaccinations can
well as many people falling into poverty. Because be carried out more widely in 2021, including in
of the complexity of the problems, it requires an Indonesia.
extraordinary policy response in terms of health,
fiscal stimulus, monetary stimulus, and also in the The speed and progress in handling the COVID-19
financial sector. The crisis conditions we face from the pandemic determines the process of economic
COVID-19 pandemic are very different from previous recovery. To mitigate the health impact of the
crises, whether the depression in the 1930s, the debt COVID-19 pandemic, governments in many countries
crisis in Latin America in the 1980s, the Asian crisis in have implemented the 3 Ts, namely: Trace, Testing
1997/98, or the global financial crisis in 2008/2009. and Treatment; while the community carries out the
The epicenter of the crisis this time is the COVID-19 3 Ms: Memakai Masker (Wearing a Mask), Menjaga
pandemic, attacking human mobility, and therefore Jarak (Keeping a Distance), and Mencuci Tangan (Hand
economic mobility, resulting in an economic recession Washing). Application varies from country to country,
affecting the monetary and financial sectors. for example, there are very stringent restrictions
Graph 1. Additional Global COVID-19 Cases Graph 2. Global COVID-19 Fatality Rate
Person
(%)
Thousand
800,000
10.00 1,600
Additional Cases as of Nov 22nd
Africa 8,220
700,000
Asia 62,898
1,400
8.00
MENA 35,196
600,000
America 235,279
1,200
Europe 279,151
500,000 6.00
Global 620,744
1,000
400,000
4.00 800
300,000
600
2.00
200,000
400
100,000
0.00
200
0
3 4 5 6 7 8 9 10 11
-2.00 0
3 4 5 6 7 8 9 10 11
2020
2020
Africa Asia MENA America
Global America Asia
Europe Global
The Number of Global Death
Europe
Data as of 20 November 2020
Data as of 20 November 2020
Source: WHO, compiled
Source: WHO, compiled
Graph 3a. Limited Mobility of Developed Countries Graph 4a. Retail Sales AE
Index Index
120
Index 100 =
100
Q4 2019
7 Days Moving Average
100
80
86.96
60 80
40
60
20
40
0
20
12 1 2 3 4 5 6 7 8 9
2019 2020
-20
1 2 3 4 5 6 7 8 9 10 11
US Germany France Italy
2020
UK Australia Canada Japan
US Germany France Italy
Singapore New Zealand Average AE
UK Spain Japan
Data as of 20 November 2020
Source: Goldman Sachs Research, GS Effective Lockdown Index, compiled Source: CEIC, compiled
on mobility (lockdown) in China, strict in Europe and Global economic performance has begun to show
relatively more relaxed in the US (Graphs 3a and improvement, and will increase even further in 2021.
3b). These policies have limited economic activity, After the contraction in the second quarter of 2020,
particularly in the second quarter of 2020. Retail sales world economic activity began to increase, although
have decreased, impacting declining consumption, it is still overshadowed by the risk of a COVID-19
production and investment (Graph 4a and 4b). The second wave. Economic improvements differ from
volume of international trade has also decreased due country to country, depending on the size of fiscal and
to the disruption of global supply chains that have been monetary stimuli, as well as the successful handling
dominated by China. Economic activity has gradually of COVID-19 and increased human mobility. The
improved from the third quarter of 2020, along with Chinese economy began to record positive growth
the increase in human mobility, although it still needs in the third quarter of 2020 and is estimated to be
time to recover to the conditions before COVID-19. the first country to begin to recover in the fourth
Graph 3b. Mobility Restrictions on EMEs Graph 4b. Retail Sales EMEs
Index Index
100 =
Index
100
Q4 2019
100
7 Days Moving Average
80 90
88.32
60
80
40
70
20
60
0
50
12 1 2 3 4 5 6 7 8 9
2019 2020
-20
1 2 3 4 5 6 7 8 9 10 11
China Indonesia Philippines Thailand Malaysia
2020
Hongkong China India Indonesia
Russia Turkey Brazil Mexico Average EM
Brazil Russia
Source: CEIC, compiled
Data as of 20 November 2020
Source: Goldman Sachs Research, GS Effective Lockdown Index, compiled
Table 1: Global Economy: Growth, Trade Volume, Commodity Prices (%, yoy)
2018 2019 2020* 2021*
Global Economic Growth 3.6 2.8 -3.8 5.0
Advanced Economies 2.2 1.6 -4.9 4.0
US 2.9 2.2 -3.8 4.3
Euro Area 1.9 1.3 -7.2 5.0
Japan 0.3 0.7 -5.7 2.5
Emerging Economies 4.5 3.7 -2.9 5.6
China 6.7 6.1 2.1 7.8
India 6.1 4.2 -8.8 8.2
South America 1.1 0.0 -7.5 3.1
World Trade Volume 3.8 -0.4 -6.3 4.4
Indonesian Export Commodity Price Index -2.8 -3.0 -5.8 4.0
Source: World Economic Outlook Database October 2020, Bank Indonesia Projection Description: * projection
quarter of 2020 (Table 1). Economic improvements occurred in large numbers and within a very short
were also recorded in the United States (US), time period, resulting in the scarcity of the US dollar
although accompanied by the highest cases of that put major depreciation pressures on the EME's
COVID-19. Meanwhile, economic recovery was currency exchange rate (Graph 6). With the handling
more limited in Europe, India and Latin America. of COVID-19 and the response with fiscal and
The global economic recovery could be seen in the monetary stimulus policies in many countries, global
improvement of several early indicators in October financial market uncertainty has begun to subside
2020, such as global community mobility, the and the flow of portfolio investment has begun to
Manufacturing and Services Purchasing Managers' return to EMEs. Since early November 2020, global
Index (PMI) in several countries, and consumer uncertainty has been decreasing after the results
confidence in the US and Europe. World trade of the US Presidential election, although volatility
volume and commodity prices have also increased.
Going forward, the global economic recovery is Graph 5. Risk Indicators for Global and Indonesian
predicted to continue with a growth of 5.0% in 2021, Financial Markets
pts Index
after contracting by 3.8% in 2020.
300 90
83
272
80
250
On global financial markets, uncertainty has
70
eased, although caution is warranted. The rapid
200 60
spread of the COVID-19 pandemic around the
50
150
world caused a global financial market panic in
40
March 2020, resulting in the Volatility Index (VIX)
78
100 30
66
and Credit Default Swap (CDS) risk indexes for
20
24
50
Indonesia soaring to 83 and 272 from previously
10
19
19 and 66 respectively (Graph 5). The wave of
0 0
2 3 4 5 6 7 8 9 10 11
portfolio investment withdrawals from developing 2020
countries (Emerging Market Economies - EMEs)
Graph 6. USD vs World Exchange Rates Graph 7. Increase in Fiscal Deficit in the World
% of
Index Index
GDP
104 100
0
Dollar appreciation
vs Asia Currencies
Dollar appreciation
101
-1.6
vs Major Currencies
102
-1.9
-2.3
-2.4
-3.1 -3.2
102 -3.4
-4
-4.2
-4.2
100
-5.2
103
-6
98
104
-8.4
-8 -8.4
-8.7
105
96
-9.8 -9.8
-10.1
106
-11.7
94
-12.8
-12
-13.3
107
92
108
-16
90 109
78 9 10 11 12 1 2 3 4 5 6 7 8 9 10 1112 1 2 3 4 5 6 7 8 9 10 11 IND MEX MAS PHP THA RUS IDN HK TWN VIET CHN KOR SIN GER JPN US SPA UK FRA ITA
2018 2019 2020
Emerging Market Advanced Economies
Dollar Index Asia Dollar index (rhs) - Reverse Order
Data as of 20 November 2020
Data as of 20 November 2020
Source: OECD, MoF, Bloomberg
Source: Bloomberg, compiled
needs to be watched out for amid concerns over a 2021 period is expected to narrow in 2022-2023 as
second wave of the COVID-19 pandemic. The VIX economies in many countries recover (Graph 8).
indicator decreased to 24 while the CDS also fell
to 78 which then encouraged the strengthening The process of economic recovery from the
of many Asian currencies against the US dollar. COVID-19 pandemic was also supported by monetary
The reduction in global uncertainty is expected stimulus from central banks in many countries. In
to stimulate foreign capital inflows and further developed countries, with monetary policy interest
appreciation of the exchange rates in developing rates approaching zero percent, central banks
countries, including Indonesia. have taken monetary stimulus by injecting liquidity
(Quantitative Easing - QE) into the financial sector,
A large fiscal stimulus was provided by many particularly banking. This has been done by, among
countries for economic recovery from the impact others, through an asset purchase program from the
of the COVID-19 pandemic. Fiscal stimulus were market, including government bonds, private bonds,
generally allocated for health budgets, social and credit securities. As a percentage of GDP, the
assistance programs for the community, incentives largest amount of QE was carried out by the European
for the business world, especially for Micro, Small Central Bank (ECB) then by the Bank of Japan (BoJ),
and Medium Enterprises (MSMEs), and tax relief
for corporations. Meanwhile, tax revenues dropped Graph 8. Forecast for Output Gap, 2020-2023
(%)
dramatically due to the economic recession. The
0
sheer amount of additional spending amid falling
-1
tax revenues has led to a widening of the fiscal
-2
deficit in many countries, with a large increase in
-3
deficit exceeding 8% of GDP in developed countries
-4
compared to deficits in EMEs, which are generally
-5
lower due to the limited financing required (Graph
-6
7). The size of the fiscal stimulus has had a positive
-7
impact on encouraging economic recovery since the
-8
third quarter of 2020 and is expected to accelerate
-9
ESP ITA FRA GBR AUS DEU JPN CAN USA IND ZAF MEX BRA IDN TUR CHN POL POL
future economic recovery from the COVID-19
Ave, 2020-2021 Ave, 2022-2023
pandemic. The widening output gap in the 2020-
Bank of England (BoE) and The US Federal Reserve Graph 10. Quantitative Easing of EMEs
% of
(Graph 9). In EMEs, monetary stimulus is implemented
GDP
4.4
4.5
through a combination of lowering policy interest
4.0
rates and injecting liquidity into banking and financial
3.3
3.5
markets. The magnitude of the reduction in interest
2.8
3.0
rates is in line with lower inflation and the need to
maintain exchange rate stability. Meanwhile, liquidity 2.5
injection (QE) is generally carried out through
2.0
1.6
monetary operations, given the limited financial
1.5
assets on the secondary market. In percentage of
1.0
0.6
GDP, the largest amount of QE was carried out by
0.5
0.2
Bank Indonesia followed by Mexico, Chile, and the
0.0
Indonesia Mexico Chile Philippines Thailand
India
Philippines (Graph 10).
Source: Haver, Central Bank, Tellimer Research, Bank Indonesia
A number of international policy coordination steps
were taken to support the global economic recovery. from the impact of declining corporate performance,
A number of important agendas surfaced in the including how to overcome very low credit growth
G20, IMF, FSB and BIS forums. One of them was (credit crunch), the risk of increasing non-performing
the need to continue fiscal and monetary stimulus loans (loan at risk), a large excess of liquidity in
in accordance with economic conditions and the financial markets (liquidity trap), and to anticipate the
handling of the COVID-19 pandemic in each country. risk of excessive price bubbles for financial assets.
This is because the COVID-19 pandemic will continue Meanwhile, for developing countries, the main
in 2021, even though vaccinations have been carried issues discussed were the impact of the COVID-19
out. Other agendas relate to anticipatory measures pandemic on increasing poverty and unemployment,
for the impact of the decline in economic activity on declining ability to pay and the need for restructuring
corporate conditions, including credit and business of foreign debt as well as mobilization of social
restructuring programs, fiscal incentives, and the assistance from donor countries.
possibility of bankruptcy. Discussion of policies
included efforts to maintain financial system stability The COVID-19 pandemic has also exposed a
number of weaknesses in the world's trade,
Graph 9. Quantitative Easing of Developed Countries monetary and financial system arrangement. In
% of
the field of international trade, in the short term
GDP
40
the COVID-19 pandemic encouraged countries to
35
prioritize domestic interests (inward looking policy),
both by increasing domestic sources of growth and
30
limiting trade relations with other countries. The
25
weakness of the international trade system, which
20
has so far relied on China in the global supply chains,
15
creates vulnerabilities (Scheme 1). This needs to be
addressed by building domestic supply chains and
10
establishing trade relations bilaterally and with a
5
number of regions (bilateral and regional free-trade
0
Fed ECB BoJ BoE RBNZ Riksbank RBA
agreements) so as to form multiple links in world
Usage Max Size
trade (multi-polar supply chains). In the monetary
Note: Including Note: including APP (include loan purchases loan purchases) & term funing and schemes; term funding schemes;
sector, the dependence of world financial markets
excluding short-term liquidity facilities
not included short-term liquidity facilities
Source: Central Bank, RBA, compiled
on the domination of the US dollar went close to
Scheme 1. The Role of China in the Global Supply Chain
2000 2019
$1.03 T $1.55 T $2.07 T $2.32 T $3.47 T $4.63 T
Share of total global trade: Share of total global trade:
Net Imports Net Imports
(1) USA 15.8% (1) China 15.6%
(2) Germany 8% Net Eksports (2) US 13.8% Net Eksports
(3) Japan 6.8% (3) Germany 9.1%
(4) France 4.8% (4) Japan 4.9%
(5) UK 4.8% (5) France 4.2%
(6) China 4.8% (6) Netherlands 4.2%
(7) Canada 4.1% (7) UK 3.8%
(8) Italy 3.5% (8) South Korea3.7%
(9) Netherlands 3.3% (9) Italy 3.4%
(10) Mexico 2.7% (10) Mexico.3%
................. .................
(28) Indonesia 0.8% (28) Indonesia 1.27%
Source: Bloomberg, compiled
re-creating the global financial crisis at the end of National Economic Performance and
March 2020. A systemic risk arises when all global Prospects: Recovery Process Underway,
investors simultaneously withdraw, in large numbers, Stability Maintained
their portfolio investment assets and exchange them
for US dollars as a safe heaven currency. To overcome The COVID-19 pandemic also had a tremendous
this, it is increasingly important to encourage impact on Indonesia's health, economy and finances,
bilateral and regional cooperation to use more local especially in the second quarter of 2020. As of 25
currencies in the settlement of trade and investment November, there were more than 500,000 positive
transactions (local currency settlement), as are steps COVID-19 cases in Indonesia, with around 425,000
to internationalize the Chinese Renminbi currency. recovered patients and 16,100 deaths (Graph 11).
In the financial sector, the growing number of hedge The social restriction policies that need to be taken
funds using algorithmic trading (AI machine trading) to prevent the spread of COVID-19 have had an
proves the vulnerability of the global financial system impact on decreasing human mobility in almost all
to pressure conditions such as at the peak of the major cities in the period from April to June, and
COVID-19 pandemic at the end of March 2020. A also have an impact on decreasing economic activity
number of initiatives were undertaken to regulate and in the second quarter of 2020 (Graph 12). Human
supervise Non-Bank Financial Institutions (NBFIs), mobility has gradually improved since July 2020, in
including these hedge funds in strengthening the line with the easing of social restrictions in various
resilience of the global financial system. regions, which has also stimulated improvement in
Graph 11. COVID-19 cases in Indonesia Graph 12. Human Mobility in Large Cities
Person (%)
Index
5.00
500,000
502,110
100
0.00
400,000
-5.00
80
84.12
-10.00
300,000
60 -15.00
-20.00
200,000
40
-25.00
-30.00
100,000
20
3.19
-35.00
4,442
-40.00
0 0
3 4 5 6 7 8 9 10 11
2020
-45.00
2 3 4 5 6 7 8 9 10 11
2020
Confirmed Cases New Confirmed Cases
Jakarta W. Java E. Java C. Java
Fatality Rate (rhs) Recovery Rate (rhs)
Bali N. Sumatra S. Sumatra E. Kalimantan
Data as of 23 November 2020
Source: Google Mobility Report
Source: Task Force for the Acceleration of Handling COVID-19, compiled
economic activity since the third quarter of 2020. National economic growth has improved since the
In the monetary sector, the global financial market third quarter of 2020 and will increase substantially
panic at the end of March and April 2020 resulted in 2021. Economic improvement is in line with the
in a large outflow of foreign portfolio investment realization of the fiscal stimulus, increased mobility
with a very high depreciation pressure on the of people and improving global demand. The
Rupiah. With a strong commitment to stability Indonesian economy in the third quarter of 2020
policies from Bank Indonesia, the Rupiah exchange grew by 5.05% (qtq) from a contraction of 4.19%
rate has strengthened significantly since the end of (qtq), or the contraction of growth decreased to
March 2020, thus supporting the national economic 3.49% (yoy) from 5.32% (yoy) in the previous quarter
recovery. Thanks be to God, the hardest times have (Table 2). There was an increased realization of
passed. Stability is maintained and the process of Government stimulus, especially in the form of social
economic recovery is ongoing. assistance, spending on other goods and services, as
Table 2. GDP by Expenditure (%, yoy)i
2019** 2020***
Component 2018* 2019**
I II III IV I II III
GDP 5.17 5.07 5.05 5.02 4.97 5.02 2.97 -5.32 -3.49
Private Consumption 5.05 5.02 5.18 5.01 4.97 5.04 2.83 -5.52 -4.04
Government Consumption 4.80 5.22 8.23 0.98 0.48 3.25 3.75 -6.90 9.76
Investment 6.64 5.03 4.55 4.21 4.06 4.45 1.70 -8.61 -6.48
Non building Investment 10.31 3.69 1.96 1.95 -0.13 1.80 -1.46 -18.62 -8.99
Building Investment 5.41 5.48 5.46 5.03 5.53 5.37 2.76 -5.26 -5.60
Exports 6.55 -1.58 -1.73 0.10 -0.39 -0.87 0.23 -11.68 -10.82
Imports 11.88 -7.47 -6.84 -8.30 -8.05 -7.69 -2.18 -16.98 -21.86
Graph 13. Regional Economic Growth in Quarter III-2020 (%, yoy)
Sumatra Kalimantan
4.50 4.61
5.67
3.23
3.73
2.31
ACEH
(0.11)
(2.22) (4.34) (4.23)
(3.10)
III IV I II III III IV I II III
N. SUMATRA 2019 2020
2019 2020
N. KALIMANTAN
(2.60)
(1.46)
RIAU
(1.67)
E. KALIMANTAN
(4.61)
KEP. RIAU
W. KALIMANTAN
W. SUMATRA (5.81)
(4.46)
(2.87)
JAMBI C. KALIMANTAN
(0.79) KEP. BABEL (3.12)
(4.38)
S. SUMATRA
S. KALIMANTAN
(1.40)
3.72
BENGKULU
(0.09)
LAMPUNG
(2.41)
DKI
(3.82)
Java
5.51 5.34
W. JAVA
3.42
BANTEN
C. JAVA
(4.08)
BALI
(5.77) NTB
(3.93)
E. JAVA
(12.28)
(1.11)
(3.75)
DIY
(4.00)
(6.69)
(2.84)
III IV I II III
2019 2020
Q III ≥ Q II Q III < Q II
Source: BPS, compiled
well as transfers to regions and village funds (transfer in the fourth quarter of 2020 and is estimated to
kedaerah dan dana desa - TKDD). Export performance reach 4.8% -5.8% in 2021.
has also improved, driven by global demand,
especially from the US and China, that is recorded Spatially, economic recovery is faster in a number
in a number of commodities such as iron and steel, of areas outside Java. Economic improvement in
pulp and waste paper, as well as textiles and textile the third quarter of 2020 was recorded in almost all
products (tekstil dan produk tekstil - TPT). A number regions in Indonesia, although 7 (seven) provinces,
of indicators show improvement, such as community including Bali, are still under pressure (Graph 13). In
mobility, non-food and online retail sales, PMI fact, 2 (two) provinces had positive growth which
Manufacturing, and public income. Looking ahead, were Central Sulawesi with 2.82% (yoy) growth
economic growth is predicted to pick up on the back and North Maluku which grew at a high rate of
of the improving global economy and accelerated 6.66%, supported by the positive performance of
budget realization for the Central and Local export-oriented industries. The easing of social
Governments, progress on the credit restructuring activities by more than 31 Regional Governments
program, and the continuation of Bank Indonesia (4 Provinces and 27 Regencies/Cities) encouraged
monetary and macroprudential stimulus. Overall, economic improvement in the third quarter of 2020.
Indonesia's economic growth will start to be positive In addition, the Government's policy of accelerating
BANK INDONESIA'S
ANNUAL MEETING 2020
Sulampua
5.21
3.55
2.32
NATIONAL
5.02 4.97
(1.10)
(1.48) 2.97
III IV I II III
2019 2020
(3.49)
(5.32)
III IV I II III
N. SULAWESI 2019 2020
(1.83)
GORONTALO
NORTH
(0.07)
MALUKU
6.66
WEST PAPUA
C. SULAWESI
2.82 (3.35)
W. SULAWESI
(5.26)
SE. SULAWESI
(1.82)
PAPUA
MALUKU
(2.61)
(2.38)
S. SULAWESI
(1.08)
Balinusra
5.52
5.34
0.92
NTT
(1.68)
(6.32) (6.80)
III IV I II III
2019 2020
Transfers to Regions and Village Funds (Transfer ke sector. Meanwhile, the trade sector has improved
Daerah dan Dana Desa - TKDD) by easing transfer in all regions in line with improving consumption
requirements supported the realization of regional and export-import activities. The improvement in
expenditures so as to increase regional economic regional economic growth is expected to continue
improvement, especially in Java. From the external in 2021, in which the regions of Java, Sumatra,
side, the recovery of the Chinese and US economies Kalimantan, Bali and Nusa Tenggara (Balinusra),
has been the driving force for improvements in and Sulampua will grow respectively by 5.2%-5.6%;
the export performances of a number of industrial 4.0%-4.4%; 2.4%-2.8%; 5.2%-5.6%; and 7.8%-8.2%.
products in Java, Sulawesi-Maluku-Papua (Sulampua)
and Sumatra. In terms of business sector, economic The resilience and stability of Indonesia's external
recovery in the Sulampua region has been driven sector is well maintained. Current account
by continued investment and increasing demand transactions in the third quarter of 2020 recorded
in the steel and mining industries from abroad. In a surplus due to improvements in exports and
Java, the economic recovery was mainly supported import adjustments in line with the weak domestic
by improved consumption due to accelerated demand. This is reflected in the trade balance
budget realization and increased mobility, thus during the third quarter of 2020 which recorded a
supporting improvements in the industry business surplus of US $ 9.8 billion, much higher than the
Table 3. Indonesia's Balance of Payments
2019* 2020**
Component (USD billion) 2018 2019*
I II III* IV* I* II* III**
Current Account -30.6 -6.6 -8.2 -7.5 -8.1 -30.4 -3.7 -2.9 1.0
A. Goods -0.2 1.3 0.6 1.4 0.3 3.5 4.4 4.0 9.8
- Export, fob 180.7 41.2 40.2 43.7 43.4 168.5 41.7 34.6 40.8
- Import, fob -181.0 -39.9 -39.6 -42.3 -43.1 -164.9 -37.3 -30.7 -31.0
a. Non Oil & Gas (Net) 11.2 2.9 3.1 2.7 3.2 12.0 5.8 3.3 9.4
b. Oil & Gas (Net) -11.4 -2.1 -2.9 -2.1 -3.2 -10.3 -2.7 -0.8 -0.7
B. Services, primary Income &
-30.4 -7.8 -8.8 -8.9 -8.4 -33.9 -8.1 -6.9 -8.8
Secondary Income
Capital and Financial Account 25.1 9.9 6.8 7.4 12.5 36.6 -3.1 10.6 1.0
1. Direct Investment 12.5 5.9 5.8 5.2 3.1 20.1 4.0 3.9 1.1
2. Portfolio Investment 9.3 5.5 4.6 4.6 7.3 22.0 -6.1 9.8 -1.9
3. Other Investment+ 3.3 -1.6 -3.6 -2.4 2.1 -5.4 -1.0 -3.0 1.8
Overall Balance -7.1 2.4 -2.0 0.0 4.3 4.7 -8.5 9.2 2.1
Memorandum:
- Reserve Assets Positions 120.7 124.5 123.8 124.3 129.2 129.2 121.0 131.7 135.2
In Month of Import and
6.4 6.7 6.8 6.9 7.3 7.3 7.0 8.1 9.1
Official Debt Repayment
- Current Account
-2.94 -2.45 -2.95 -2.61 -2.83 -2.71 -1.34 -1.20 0.36
(% GDP)
+ includes financial derivatives
Source: Bank Indonesia Note: * Preliminary figures; ** Figures are very provisional
previous quarter's trade balance surplus of US $ 4.0 a surplus with a lower current account deficit and a
billion (Table 3). The capital and financial account larger capital account surplus. The current account
balance also remains strong, mainly supported by deficit is projected to be below 1.5% of GDP in 2020
inflows of foreign portfolio capital in line with large and around 1.0%-2.0% of GDP in 2021, supporting
global liquidity, the attractiveness of domestic the resilience of Indonesia's external economic
financial assets, and continued investor confidence sector.
in the prospect for the domestic economy. Foreign
exchange reserves in October 2020 were recorded at With the stabilization policy of Bank Indonesia, the
133.7 billion US dollars, far above the international Rupiah exchange rate is stable and has the potential
adequacy standard. Going forward, it is estimated to strengthen. As stated above, the COVID-19
that Indonesia's external stability will be maintained. pandemic caused panic among investors and global
The balance of payments is expected to experience market players, especially at the end of March and
April 2020 which prompted large capital flight Graph 15. Rupiah Exchange Rate Againts US Dollar
flows and weakened exchange rates for various vs Several Countries:
world currencies, including Indonesia. The Rupiah 23 March - 20 November, 2020
was under pressure and it reached Rp. 16,575 per
TRY -14.09
EUR -9.54
US dollar on 23 March 2020 (Graph 14). With the
BRL -4.05
stabilization steps taken by Bank Indonesia and
INR 2.87
intensive communication to investors and domestic
CNY 4.39
PHP
6.41
and foreign market players, the Rupiah exchange
JPY 7.10
rate has strengthened significantly again, reaching
MYR
8.66
Rp. 14,165 per US dollar; or it appreciated 17.01%
SGD 8.75
8.80
THB
from 23 March 2020 to 20 November 2020 (Graph
KRW 13.70
15). Going forward, Bank Indonesia views the
ZAR 15.84
Rupiah exchange rate will remain stable and still
IDR 17.01
(%)
-20.00 -15.00 -10.00 -5.00 0.00 5.00 10.00 15.00 20.00
has the potential to strengthen. This is in line with
point-to-point
its fundamentally undervalued level, supported by
Source: Reuters and Bloomberg, compiled
low and controlled inflation, low current account
deficit, high attractiveness of domestic financial administered prices (AP). Core inflation remains low
assets and a declining risk premium for Indonesia. due to weak domestic demand, consistency of Bank
Bank Indonesia continues to strengthen its Rupiah Indonesia policies to anchor inflation expectations,
exchange rate stabilization policy in accordance with and maintained exchange rate st