The position of Indonesia' foreign exchange reserves recorded US$138.0 billion in January 2021, an increase compared to the end of December 2020 at $35.9 billion - Photo: Special

JAKARTA (TheInsiderStories) – The position of Indonesia’ foreign exchange (forex) reserves recorded US$138.0 billion in January 2021, an increase compared to the end of December 2020 at $35.9 billion, the central bank reported on Friday (02/05). The amount is equivalent to 10.5 months of import financing or 10.0 months of imports and servicing of government external debt, and is above the international adequacy standard of around 3 months of imports.

Bank Indonesia (BI) considers that the reserves are capable of supporting external sector resilience and maintaining macroeconomic and financial system stability. It said, was mainly influenced by the issuance of government global bonds and tax revenues.

Commenting on the current economic situation, BI sees the domestic economic growth that improves until the end of 2020 is predicted to gradually increase in 2021. The central bank said is directing the accommodative policy mix and strengthening synergies with the government and related authorities to continue supporting the national economic recovery.

The improvement in the domestic economy in the fourth quarter (4Q) of 2020 was supported by the realization of stimulus and positive contributions from the external sector. Government consumption grew positively in 2020 at 1.94 percent influenced by the realization of the stimuli, especially in the form of social assistance, spending on other goods and services, as well as Transfers to Regions and Village Funds.

Household consumption growth improved to minus 3.61 percent in the last quarter of 2020 from minus 4.05 percent in the 3Q of 2020, inline with improvements in community mobility. Overall for the year, household consumption contracted by 2.63 percent.

Investment growth also improved from minus 6.48 percent in the third quarter to minus 6.15 in 4Q of 2020. During last year, the investment sector experienced a contraction of 4.95 percent. While, net exports were recorded positive on the back of improved export performance in line with improving economic performance in several export destination countries amidst limited import performance.

In terms of business fields, most of the business fields experienced improvement in the fourth quarter of 2020. The health sectors, work from home, and school from home activities recorded positive growth and continued improvement. Agriculture and education sectors also recorded positive growth. Then, the processing industry and trade sectors, which contributed significantly to the economy, continued to improve, although they still contracted.

Last week, statistic bureau reported, the economic growth of Indonesia in the 4Q of 2020 contracted 2.19 percent compared to last year and  improving from the 3Q of 2020 minus 3.49 percent. With these developments, Indonesia’s economic growth contracted by 2.07 percent in 2020.

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