Good and bad news; Indonesia’s economic activity rebounds, but so do new COVID-19 cases

And this is not unimportant given that retail sales are a leading macroeconomic indicator. The growth in these sales informs us that Indonesian consumer demand for finished goods (measured by purchases of durable and non-durable goods) has finally rebounded. Indeed, retail sales had already improved on a monthly basis (which, too, is positive as well as a strong indication that Indonesia is gradually emerging from the COVID-19 crisis). However, we were still expecting retail sales to rebound on an annual basis as this would indicate that current economic conditions are better than a year ago. This news would certainly arouse a little more optimism in society.

It was initially hoped that the rebound on an annual basis would occur in March 2021, as Indonesia had officially entered the COVID-19 crisis in March 2020 when – earlier this month – the first two cases of COVID-19 were confirmed in the country. . Interestingly, at the onset of the COVID-19 crisis last March, this led to some hoarding and as a result retail sales have not yet fallen sharply resulting in a contraction in prices. retail sales of 14.6% (y / y) in March 2021 (as they might not yet benefit from the weak base effect).

However, April is another story. In April 2020, we began to see heavy closures in urban centers across Indonesia (including the temporary closure of schools and shopping malls, while staff and other workers were forced to work at home, with the exception of vital sectors), triggering a contraction in retail sales (a contraction that would peak the following month: May 2020). These trade and social restrictions drastically reduced consumption last year, as evidenced by the 16.9% (year-over-year) contraction in retail sales in April 2020.


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