Economic Outlook 2021: Vaccination Becomes Reference To Get Cuan
Illustration of stock price movements on the Indonesia Stock Exchange. (Photo: Doc. Antara)

JAKARTA - The first nationwide implementation of the COVID-19 vaccination on Wednesday, January 13 brought great hopes, including for the economic sector. Through these efforts, it is hoped that it can become a turning point for efforts to accelerate recovery.

Understandably, a pandemic condition never imagined that it would have a 'devastating' impact which was quite severe for the economy. As evidence is how the economy over the past year.

The government has even issued Presidential Decree 72/2020 concerning Posture Changes in the 2020 State Budget to accommodate several existing adjustments. The budget deficit was widened to 6.3 percent, far from the previous stipulated figure of 3 percent.

Sure enough, state revenue during 2020 was recorded at IDR 1,633.6 trillion. As for the expenditure side, it is known that it is worth IDR 2,589 trillion. This record makes the 2020 state budget deficit at IDR 956.3 trillion or 6.09 to GDP (gross domestic product).

"This extraordinary policy is focused on helping the public and the business world recover and revive," said Finance Minister Sri Mulyani in a press conference for the realization of the 2020 State Budget, Wednesday, January 6.

In general, the macroeconomic picture in the 2020 fiscal corridor is as follows: 1. Economic growth -1.7 percent to -2.2 percent (year-on-year) 2. Inflation 1.68 percent (year-on-year) 3. 3-month SPN interest rate 3.19 percent 4. Exchange rate of IDR 14,577 per US dollar 5. The price of Indonesian crude oil is US $ 40 per barrel6. Oil lifting 40,000 barrels per day7. Gas lifting is 983 thousand barrels of oil equivalent per day

Reference that determines recovery

Chief Economist and Investment of PT Manulife Aset Manajemen Indonesia Katarina Setiawan said there are five references that can be used as guidelines to determine the acceleration of Indonesia's economic recovery this year.

The first is in terms of monetary and fiscal policy. According to him, this segmentation which is held by the government is an important element in stimulating the economy.

"From the monetary side, we believe Bank Indonesia will maintain an accommodative stance by becoming a standby buyer in government bond auctions. Meanwhile, fiscal instruments will still provide support for the national economic recovery process with a commitment of PEN funds (national economic acceleration) of IDR 372 trillion or 2.3 percent of gross domestic product, ”he said in an online seminar, Thursday, January 14.

Furthermore, Katarina said the second reference was the government's efforts to maintain stable macroeconomic conditions through the procurement of vaccines. In his notes, the country targets to vaccinate 40.2 million people by April 2021. Then it will increase to 141 million people by the end of May 2021.

Minister of Finance, Sri Mulyani. (Photo: Instagram @smindrawati)

"Increasing people's confidence in the effectiveness of vaccines encourages people to do economic activities. If all this goes on, the economic wheels will certainly move, demand for credit will increase, so that the business world can increase the production of their goods and services, "he said.

Meanwhile, the third reference is the stable movement of the rupiah value. According to his analysis, the exchange rate will be maintained by taking into account the factor of the US dollar which is still weak due to the accommodative policy of The Feds, reduced current account pressure, low inflation, and corrected foreign ownership of Indonesia's financial assets.

"However, keep in mind, pressure from the current account is sloping due to declining imports. "Along with the economic recovery, imports will definitely be running again because Indonesia needs capital goods for production activities, especially industry," he said.

If that happens, Katarina ensures that the trade deficit this year will be higher than the 2020 period.

Furthermore, the fourth is related to the application of the omnibus law. In this sensitive reference, Katarina sees an opportunity to increase the productivity of industry in the country. Because, this regulation is believed to increase Indonesia's competitiveness in attracting foreign investment into the country.

"Omnibus law has the potential to turn Indonesia into an important world chain. The accuracy of execution is very important in ensuring that the reform of the labor system and industry can be implemented properly, "he explained.

Then the last one is the question of the return of foreign portfolio funds which are expected to support and complement investment in the real sector.

"The latest news flow related to vaccines and the support of the government and central bank in boosting the economy during the pandemic has triggered a shift in sentiment towards emerging market financial markets, including Indonesia," said Katarina.

For this reason, the Manulife boss is optimistic that the domestic financial market can absorb foreign investment more strongly due to a number of accommodative policies.

"In the future, the potential for inflow is still open for Indonesia, given the relatively low foreign ownership in the stock and bond markets. Not to mention the yields that tend to be attractive compared to other mature countries, "Katarina concluded.

Investment options 2021

The financial market is still a fairly sexy investment line to bring in money throughout 2021. Some things that can be looked at are the commodities, telecommunications and banking sectors.

The bright prospects for the financial market, especially stocks, are reflected in the positive sentiment of market players regarding the vaccination process in various countries including Indonesia.

Trading illustration. (Photo: Doc. Antara)

Meanwhile, the mainstay commodity sectors that can be recommended are the oil, coal and industrial metals industry. This was stated by Samuel Kesuma, Senior Portfolio Manager of PT Manulife Aset Manajemen Indonesia.

"Good nickel demand for electric car batteries brings a positive signal to the mineral and mining commodity sectors," he said in a webinar, Thursday, January 14.

The next sector that is projected to provide support to shareholders is telecommunications, which shows strengthening during the pandemic along with the implementation of the PSBB. The public's need for internet data packages is a strong indication of the increasing performance of telecommunications issuers.

Lastly is the banking sector. It is undeniable that the banking industry currently has better resistance to shocks than the 1998 economic crisis. The banking sector is considered to be in a mature stage with thick liquidity conditions. It was different during the reform era.

"The proof is that banks are still brave enough to reduce interest rates, and credit growth rates are still single digits. This means that liquidity builds up in the bank, ”said Samuel.

In addition, the banking financial services sector can still operate optimally under the imposition of large-scale social restrictions. Another added value offered by this sector is the increasingly massive digital banking transactions in line with the increase in online shopping.

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