The fall in the monthly inflation in February 2021 further indicates that the handling of the Covid-19 pandemic and the economic recovery program must go hand in hand.
By
kompas editor
·3 minutes read
The fall in the monthly inflation in February 2021 further indicates that the handling of the Covid-19 pandemic and the economic recovery program must go hand in hand.
The latest data released by the Statistics Indonesia (BPS) shows inflation in February was 0.1 percent, a decline from 0.26 percent in January and 0.45 percent in December 2020.
The fall in inflation is not good news for us because it shows weak public spending in early 2021, and we know public spending is the main driver of economic growth.
The fall in inflation, which also shows that citizens are still reluctant to are less able to spend, occurred amid the government\'s efforts to promote the nation’s economic recovery through various social assistance programs and fiscal and monetary stimuli. Various incentives have been provided to support the economic recovery, including zero down payment for the purchase of motor vehicles and houses and the exemption of luxury goods taxes for new cars with engine capacities under 1,500 cc.
The vaccination program has started with a target of covering 70 percent of the population, or around 181 million people, by the end of 2021.
Consumer confidence remains weak amid the government\'s efforts to overcome the COVID-19 pandemic. The vaccination program has started with a target of covering 70 percent of the population, or around 181 million people, by the end of 2021.
Efforts to suppress new COVID-19 cases are also being carried out by limiting activities at the community level such as through neighborhood units (RT) and community units (RW). At the same time, the government is increasing its efforts to detect infected people and providing them treatment.
We have seen that the number of new COVID-19 cases has begun to decline, but on Tuesday, the government announced the discovery of a new COVID-19 variant in Indonesia, coded 117, discovered first in the United Kingdom. We do not yet know how well the Sinovac vaccine, which will be given to millions of health workers, elderly people and public workers, will work in providing immunity to this new variant and other variants that may emerge.
Even so, we still have another source of growth, namely investment, which is expected to increase following the implementation of the Job Creation Law. As the name implies, this law must be able to create new jobs that will encourage household spending. The government is also continuing to build physical infrastructure that has an impact on productivity, such as dams and improved electricity services and digital infrastructure, to increase retail trade and financial inclusion.
On the other hand, we must be able to maintain existing sources of growth. The latest Statistics Indonesia (BPS) report indicated a decline in the farmers exchange rate. Soon we will enter the bumper rice harvest, which usually causes a decline in prices at the farm level and will affect the incomes of household farmers. The impact on the national economy is not significant, but the farmer\'s exchange rate should be maintained in order to help increase the productivity of farmers and the agricultural sector. The increase in consumer spending will also help the economy recover and create more employment.
(This article was translated by Hendarsyah Tarmizi)