Indonesia, Ending Lockdown and Gaining Momentum

President Jokowi of Indonesia Proposes 3 Major Policies
"Focus on Sectors Benefiting from Green Economy, Digitalization of SMEs, and Downstream Development"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Gong Byung-sun] Key indicators in Indonesia, which had deteriorated due to COVID-19 lockdown policies, are showing signs of improvement alongside favorable export-import conditions. After the lockdown policies ended, it is expected that President Joko Widodo's three major strategies will lead to a limited upward trend.

According to Korea Investment & Securities on the 4th, the Indonesian stock market rose by 1.3% throughout August, fluctuating around the 6000 level. As of the 31st of last month, except for the IT sector, which fell 6.3% compared to the previous day, healthcare (-1.4%) and energy (-1.0%), all other sectors closed higher.

Indonesia's key indicators had worsened due to the COVID-19 lockdown policies. However, favorable export-import conditions have supported the foundation of Indonesia's economy. Exports and imports in July increased by 29.3% and 44.4% respectively compared to the same period last year. The trade balance in July recorded a surplus of $2.59 billion (approximately 2.9966 trillion KRW), expanding compared to the previous month. So-yeon Lee, a researcher at Korea Investment & Securities, explained, “Although the growth rate of exports and imports is slowing as the base effect diminishes, the continued trade surplus is a positive sign.”

The manufacturing index also showed a slight recovery. The Purchasing Managers' Index (PMI) for manufacturing in August remains below the baseline of 50 but improved by 3.6 points compared to the previous month. Researcher Lee said, “If normalization of daily life begins this month, consumer sentiment will also confirm its bottom. We expect a smooth economic recovery in the order of exports and imports, production activities, and consumption.”

Lockdown policies have been gradually eased this month. The number of daily new confirmed cases decreased from the 50,000 range to the 10,000 range, leading to a partial relaxation of the Level 4 social activity restrictions. The vaccination rate, which was 17.3% at the end of July, increased to 23.3% by the end of August, accelerating the pace of vaccinations.

Going forward, President Joko Widodo's three major policies are expected to impact the Indonesian stock market. President Joko, who will serve until 2024, has announced that during his remaining term, he will focus on green economy, digitalization of small and medium enterprises, and downstream development as key economic strategies. Researcher Lee explained, “Attention should be paid to the IT sector, including e-commerce platforms that can benefit from the three strategic tasks, as well as the energy sector.”

This content was produced with the assistance of AI translation services.