Economic activity continued to decline in the second quarter of 2020 where economic growth fell to 5,32% (yoy), much lower than the positive growth in the first quarter of 2020 of 2,97%. The health crisis has halted the economy in almost all economic sectors with the top three sectors of the Indonesian economy (manufacturing, wholesale & retail trade, and construction) experiencing greater negative growth compared to the economy as a whole. Apart from that, the economic slowdown is also reflected in the expenditure side, where household consumption growth fell to -5,51% (yoy) from positive growth in the first quarter of 2020 of 2,84%. Mobility restrictions, cautious behavior and loss of labor income have caused a sharp contraction in almost all consumption sub-sectors, except consumption in health & education and equipment. Limited business activities and household consumption contributed to slow credit growth. The low inflation rate also confirms that aggregate demand is still at its lowest level. Meanwhile, from the external sector, trade continues to decline from pre-pandemic levels due to a decline in global supply and demand, although this figure has improved slightly since July when positive monthly growth was recorded. However, a deeper decline in imports than exports has contributed to a trade balance surplus and a decline in CAD which reached US$-2,9 billion or equivalent to -1,2% of GDP in Quarter-II 2020.

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