indonesia experiences deflation for five consecutive months
2024-10-04
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china news service, jakarta, october 3 (reporter li zhiquan) indonesia is facing considerable deflationary pressure. southeast asia's largest economy has experienced deflation for five consecutive months, according to official statistics.
"we have to look at it as a whole," indonesian economic coordinating minister airranga said on the 3rd. although the country's deflation trend has continued for five months, the entire national economy still maintains good development momentum.
this is his second response to this topic in two days. he said a day ago that this was the result of the government's efforts to curb inflation and that people's purchasing power had not weakened.
according to data released by indonesia's central bureau of statistics on october 1, the country experienced a deflation rate of 0.12% in september 2024, which was the fifth consecutive month of deflation since may. indonesia's statistics department analyzed that this was generally caused by a drop in volatile food prices. taking the peppers that indonesians like to eat as an example, monitoring shows that the prices of peppers and red peppers in the jakarta special administrative region in september were at the lowest level in the past two years.
some economists have given different interpretations. they believe that the five consecutive months of deflation are due to people's weak purchasing power or demand pressure.
ajib, economic policy analyst at the indonesian employers association, said the situation reflects the decline in public purchasing power. if prices are stable, it's likely because demand has decreased. he doesn't think it's just a result of falling commodity prices.
mohammad faisal, executive director of the indonesian economic reform center, said this is worrying when indonesia's economic growth rate is still above 5%.
consumption is one of the important pillars of indonesia's gross domestic product (gdp), and economists are worried that this will affect indonesia's economic growth.
in addition, looking at the manufacturing purchasing managers' index (pmi), indonesia's index has continued to decline in the past few months, falling from 54.2 in march to 52.9 in april, and then to 52.1 in may and 52.1 in june. 50.7 and 49.3 in july. the index is still below 50. the pmi starts from 50. a value above 50 means business activity is expanding, while a value below 50 means business activity is contracting.
judging from historical data, indonesia experienced seven consecutive months of deflation after the asian financial crisis. during the covid-19 pandemic, there were three consecutive months of deflation.
airlangga responded that indonesia's economic situation is still good.
he cited various indicators to prove it. for example, the country's consumer confidence index rose to 124.4 in august from 123.4 in the previous month, indicating that consumers' confidence in economic conditions has increased. foreign exchange reserve positions also increased in august, rising from us$145.4 billion in the previous month to us$150.2 billion. the exchange rate is controlled at the level of 15,300 indonesian rupiah/usd, having previously fallen to 16,400 indonesian rupiah/usd.
indonesian finance minister sili mulyani recently stated that the country’s economic growth is expected to be relatively stable above 5% in the third quarter of this year, reaching 5.06%. (over)
