Bank Mandiri Reveals Positive Signals Of PPKM Relaxation: Public Spending Significantly Improves

Illustration (Photo: Doc. Ministry of Finance)

JAKARTA - Chief Economist of PT Bank Mandiri Tbk. Andry Asmoro said the increasingly controlled pandemic situation accompanied by relaxation of the Implementation of Community Activity Restrictions (PPKM) in a number of areas, especially Java and Bali, had a positive impact on the economy.

According to him, this cannot be separated from the increase in mobility which is closely related to productive activities.

"Along with the relaxation of the PPKM, public spending has shown a significant improvement," he said in a press statement, Thursday, September 9.

Andry added that in mid-August the public spending frequency index returned to the pre-pandemic level of 104.8. Likewise, the expenditure value index improved and rose to the level of 89.5.

"In the next few weeks, along with the relaxation of the PPKM, we see that the trend of recovery in spending will continue," he said.

Furthermore, the state bank economist stated that the recovery in spending occurred at every level of society. This is indicated by the expenditure of the middle class group which has experienced a drastic increase. It was stated that as of August 29, the middle class expenditure index showed 122.5, which means it is already above the pre-pandemic.

To note, due to the spread of the delta variant that had peaked at the end of June and throughout July caused pressure on the economic sector in Indonesia.

The government responded to the second wave of this pandemic with a more stringent implementation of PPKM by and then an impact on a significant reduction in public consumption.

"With the latest developments, we estimate that economic growth has the potential to slow down slightly but will still record positive growth in the third quarter of 2021 at the level of 3.51 percent on an annual basis (year-on-year / yoy)," he said.

Meanwhile, for the whole year Andry projects economic growth to reach 3.69 percent yoy.

"In the future, the economic recovery strategy must be in line with efforts to control the pandemic," he concluded.