Further GDP contraction projected as Indonesia records third-month deflation

Indonesia will likely see a deeper economic contraction in the third quarter as the country has recorded a decline in three consecutive months for the first time since the 1999 Asian financial crisis, signaling weak purchasing power. The consumer price index (CPI) fell 0.05 percent in September from a month earlier, driven by lower airline fares and food prices. Deflation stood at 0.05 percent month-on-month (mom) in August after a 0.1 percent monthly deflation in July, according to Statistics Indonesia (BPS) data. On that basis, Indonesia’s annual inflation stood at 1.42 percent in September, far below Bank Indonesia’s (BI) target of 2 percent to 4 percent this year. “The supply side is strong enough but unfortunately, purchasing power remains weak,” BPS head Suhariyanto told reporters during a virtual presser on Thursday. “The COVID-19 pandem…