ABSTRACT
The economic impact of COVID-19 is a vast new area for research. The issue is relatively new, and data are still quite limited. Very few studies exist on the economic impact of COVID-19 in Indonesia, aside from a spattering of media articles. To fill the gap, this chapter will discuss in greater detail the economic impact of COVID-19 on the Indonesian economy. Specifically: how mobility restrictions have changed behaviour; how the policy response has been carried out; and what needs to be considered for the future. We captured several interesting findings that gauge potential consequences on the agenda of Indonesian economic recovery. We find that after rapid increase post reopening of the economy, people’s mobility began to level out. A shock to additional deaths in the first place induces people to increase the time spent at home but surprisingly only for less than five days. The evidence presents quite a dilemma, as evidence also exists that people’s visits to certain places affect the number of new cases. As long as the pandemic is not resolved, demand for goods and services will remain limited, whilst we find that inducing consumption is significantly important to drive investment and produce sustain economic recovery. Gradual reversal of fiscal and monetary stimulus policies is then suggested. Reducing the budget deficit should be in line with economic situations.
