It is not surprising that Covid-19 has had a very negative impact on Indonesia's economic growth because the outbreak has caused disruption in all aspects of the economy. GDP growth experienced a sharp contraction of -5,32% (yoy) in the second quarter of 2020, which was the worst decline since the 1998 Asian Financial Crisis. Several main sectors such as manufacturing, wholesale and retail trade, construction, transportation and accommodation are sectors- sectors hardest hit by social restriction policies aimed at containing the spread of the virus. The economic slowdown is also fully reflected on the expenditure side, where negative growth is seen in all GDP components. Consumption and investment fell by -5,51% and -8,61% (yoy), respectively. Although the possibility of a slowdown in economic activity in the third quarter of 2020 cannot be avoided due to businesses being unable to operate at full capacity and lower sales preventing a full economic recovery, the government must remain vigilant and focused on avoiding a further economic slowdown. Meanwhile, low inflation will continue and there is even the possibility of deflation in the coming months. Thus, the challenge for the government going forward is to increase demand and avoid deflation.

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