The COVID-19 (coronavirus) pandemic andassociated containment measures triggered the deepest globalrecession in eight decades. As many countries implementedlockdowns and travel restrictions, global demand for goodsand services plummeted along with tourism flows andcommodity prices; supply chains were disrupted; andfinancial market volatility spiked. The Government ofIndonesia also implemented mobility restrictions frommid-March and then a partial lockdown from April to June,preventing many firms and shops from operating, anddiscouraging many consumers from shopping. Hit by severeexternal and domestic shocks, economic activity tumbled.Real GDP growth slumped from 5.0 percent yoy in Q4 2019 to3.0 percent in Q1 2020, the lowest quarterly growth since2001. Private consumption slowed as mobility restrictionsand personal avoidance behavior curbed householdconsumption. Investment growth also declined with heighteneduncertainty and lower commodity prices. There wasbroad-based slowdown across sectors. Manufacturing,construction and low value-added service sectors includingtransport, storage, hotels and restaurants, sectors thatemploy a larger number of workers, all saw a near halving intheir sectoral growth rates from Q4 2019. In contrast,growth of modern, knowledge-intensive services sectors,including digital, financial, education and health servicesaccelerated. The slowdown in domestic demand and theunexpected growth in some manufactured exports helped narrowthe current account deficit (CAD) to 2.5 percent of GDP inQ1 2020 from 2.7 percent of GDP in Q4 2019. The goods tradesurplus soared, as some diversion of manufacturingproduction from China and higher palm oil prices earlier inthe year propped up export values, while imports contracteddue to lower consumption and, investment and falling oilprices. With the sudden stop in global travel and transport,both services exports and imports plunged.
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