Bank Indonesia reported the real sales index grew from minus 4.3 percent to minus 2.7 percent in March - Photo by Finance Ministry Office

JAKARTA (TheInsiderStories) – Bank Indonesia (BI) reported the retail sales survey improved in February compared to January 2021. Based on the latest information released on Monday (04/12), the real sales index (RSI) grew from minus 4.3 percent to minus 2.7 percent on monthly basis (MoM).

The respondents said that the improvement was driven by increased community demand during Chinese New Year and national holidays. Repairs occurred in most categories of goods, such as motor vehicle fuels, other household appliances, spare parts and accessories.

Based on the survey, respondents predicted the increase in retail sales will continue to March 2021. This is reflected in the RSI for March 2021, which is projected to grow by 2.9 percent from the previous month, inline with the increasing public demand amid favorable weather.

This is supported by meteorology, climatology, and geophysical agency data that the average rainfall is in the medium range (50 – 150 mm) and has passed the peak of the rainy season. All groups recorded increased sales performance, especially the Other goods group, including the clothing sub-group, as well as the cultural and recreational goods group recorded positive growth.

On an annual basis, the retail sales are predicted to improve to minus 17.1 percent compared to a year ago at minus 18.1 percent. The improvement occurred in almost all commodity groups surveyed, especially other goods group, including the clothing sub-group, motor vehicle fuel group, and the cultural and recreational goods group.

In terms of prices, respondents predict inflationary pressure in the next three months to May will be relatively stable, while in the next six months to August it will decrease. In the next three months, the general price expectation index (GPEI) was estimating at 156.4, stable from the previous month, supported by an estimate of sufficient supply and smooth distribution.

While, GPEI for the next six months is 141.7, lower than 153.5 in the previous month, influenced by relatively low post-national holiday demand and smooth distribution of goods. As known to support the public spending, Indonesian government has released National Economic Recovery Program (ERP) of Rp579.8 trillion (US$39.99 billion).

In 2021, the framework for economic recovery will focus on health sectors and public spending to hold back the economy which contracted 5.3 percent. While, BI, said the Governor, Perry Warjiyo, will continue to direct all policies to encourage the economic growth.

As an example, the central bank has lowered the interest rate six times since 2020 by 150 basis points to 3.50 percent and carried out a liquidity injection (quantitative easing) of Rp796.60 trillion or equal to 5.15 percent of gross domestic products (GDP) from 2020 to April 7, 2021. The Bank also relaxed down payment for motorized vehicle credit or financing and the loan or financing to values ratio for property sectors.

Then, encouraged transparency in banking prime lending rates, strengthened the macroprudential intermediation ratio by including export bills as financing component, as well as gradually imposing disincentive provisions to encourage the distribution of bank loans or financing to the business and exporters. BI also continues to encourage the digitalization of the payment system.

While, Financial Service Authority (FSA) has produced debt restructuring policy for small and medium enterprises. The agency said will continue to implement policies to reduce volatility in the capital market as well as continue credit and financing restructuring policies. The chairman, Wimboh Santoso is also optimistic that in 2021 the economic recovery will run faster with various stimulus policies synergies issued by the finance ministry, Bi, and his office.

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