In our previous article, VISI predicted that Indonesian economy would only grow by 3.5% in 2020. Yet, based on the latest update from Badan Pusat Statistik (BPS), the economy was declining by 2.1% in Q1/2020 if compared to the previous period, namely from 5.07% to only 2.97%. In this Q2/2020, Indonesian economy is expected to decline lower, or even be the worst one. Earlier in the first quarter, business players were still able to run their business freely, not hindered by the government’s large-scale social restriction (PSBB) protocol. For this second quarter, however, the situation is different. Some protocols, including the PSBB, related to efforts to minimize the COVID-19 pandemic have caused operational restriction or even prohibition to operate for some business players. Based on data of economic growth in Q1/2020 and previous quarters, VISI predicts that Indonesian economy will only grow by 1.17% in Q2/2020 as business players got cripple to operate in Indonesia.
To this point, the COVID-19 Pandemic is still a focus of concern for business players. It is because the pandemic could ruin or hamper their business existence. Based on data from Badan Pusat Statistik (BPS), performance of nearly all business sectors in Indonesia was declining in Q1/2020, if compared to the same period of previous year. Unlike the other sectors, nevertheless, four sectors were still growing in positive. They are Information Technology and Communication sector (8.3%), Financial Services and Insurance (45.8%), Education Services (5.2%), and Health Services and Social Activities (21.0%). Apparently, the significant growth of financial services and Insurance, and Health Services and Social Activities is related to a fact that during such depressing condition, customers put main priority on financial and health services rather than on secondary needs.
During this pandemic COVID-19 pandemic, when sellers-buyers have to take social or physical distancing, the business players or communities will choose to take selling-buying transactions through online media. This, indirectly, will also increase the demand for online-based financial services. Likewise, as for health services, the communities will definitely be more protective in securing their health condition to avoid the COVID-19 virus. This situation will also lead to the increasing demand for health services and products in all medical facilities in Indonesia. In fact, due to high demand and consumption, some medical products became hard to find in the market.
In contrary to the above four sectors, three sectors experienced the most significant drop in Q1/2020. The three sectors are Agriculture, Forestry, and Fisheries (-98.9%), Mining and Quarrying (-81.5%), and Transportation and Warehousing (-75.8%).
It is a fact that in these three sectors, it is not easy to avoid physical contact during the works. Physical or social distancing will only stop the operational activities, and eventually, cause a loss or even bankruptcy to factories or companies
Today, the Ministry of Trade needs to focus on domestic trade by increasing the roles of Micro, Small, and Medium Enterprises (MSMEs), which are believed to contribute to the national economy. In such a current situation, the domestic trade must be focused on foods, staple supplies, and daily necessities and be more selective in prioritizing the imported commodities with strict control that will not only benefit large-scale companies.
Furthermore, the government also needs to pay concern to the export. The export performance, which is supported by exports of non-oil and gas commodities, grew positively by 4.67%, compared to negative 0.69% growth in the first quarter of previous year. The positive export growth from this non-oil and gas segment occurred for the export of jewellery and diamonds, electrical machinery or equipment, and iron and steel. On the contrary, export of oil and gas experienced a contraction of 15.43% or deeper than 7.82% in the first quarter of 2019. Exports of services also decreased again namely by 18.34%, if compared to the only 1.98% decrease in the first quarter of previous year another side, the export performance, which is supported by exports of non-oil and gas commodities, grew positively by 4.67%, compared to negative 0.69% growth in the first quarter of previous year. The positive export growth from this non-oil and gas segment occurred for the export of jewellery and diamonds, electrical machinery or equipment, and iron and steel. On the contrary, export of oil and gas experienced a contraction of 15.43%, or deeper than 7.82% in the first quarter of 2019. Exports of services also decreased again namely by 18.34%, if compared to the only 1.98% decrease in the first quarter of previous year.