Jakarta (Indonesia Window) – Indonesia’s financial system stability in the second quarter of 2020 was normal but awareness should be increased amid the COVID-19 pandemic, according to the finance minister as quoted by the State Secretariat here on Thursday.

Finance Minister Sri Mulyani Indrawati who serves as the Indonesian Financial Stability System Committee along with the top executives of the organization, namely the central bank Bank Indonesia, the Financial Service Authority and the Deposit Insurance Institution made the remark on a virtual press conference on Wednesday (Aug 5).

“The COVID-19 pandemic has caused the economic growth both at provincial and national levels to undergo contraction, and the correction in the global and national economic growth has been seen in the second quarter,” the minister said.

She added that the possible second wave of COVID-19 in different countries which have opened their economic activities, and uncertain time when vaccines for the virus are distributed to people have created uncertainty in the national and global economic activities.

According to Sri Mulyani, various international institutions have made sharp revisions on the global economic projection, saying the International Monetary Fund (IMF) estimated that the global economic growth would contract by minus 4.9 percent in October this year.

The IMF would issue its new projection for 2020, the World Bank would revise the global economic growth to minus 5.2 percent for 2020, and the Organization for Economic Co-operation and Development (OECD) would give its projection in the range between minus 7.6 percent and minus 6 percent, she noted.

Meanwhile, the Indonesian Central Agency of Statistics (BPS) on Wednesday (Aug 5) announced the national economic growth in the second quarter underwent contraction of minus 5.32 percent, or much lower than that in the same period last year at 5.05 percent.

Such a condition was influenced by the steep decline in the economic activities in April and May.

However, the committee saw improvement in June, hoping that it could be maintained in the third quarter.

“The measures taken by the fiscal and monetary authority especially in the financial sector by the Financial Service Authority and the Deposit Insurance Institution are paying attention to the economic dynamism and possible impacts on the stability of our financial system,” the minister said.

Sri Mulyani added, besides analyzing the existing data, the committee should also continue to formulate and design policies on efforts to minimize negative impacts of the COVID-19 on the economic activities and the financial sector.

The committee would also formulate policies if changes are needed in line with current developments in the sectors of economy and finance, the minister said.

Reporting by Indonesia Window