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Second Quarter 2021 Economic Performance of East Java

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GROWTH East Java’s economy in the second quarter of 2021 showed an extraordinary performance by growing by 7.05 percent compared to last year’s situation. East Java’s economic performance is only 0.02 points apart from the national economic growth of 7.07 percent. Has East Java’s economic performance returned to pre-Covid-19 levels?

Handling health in this case the vaccination program is one of the keys to handling the economy. The proper handling will encourage people’s confidence to carry out mobility. Population mobility is associated with economic interactions which in turn increase public demand and encourage supply.

Indications of increased supply on the production side can be seen from various signs, such as the PMI (Purchasing Managers’ Index) which is always at an expansive level throughout the second quarter. Economic actors are optimistic about the course of the economy and the economy will develop. In addition, the increase in motor vehicle sales indicates a strengthening of public consumption demand, especially the middle class. Several crucial policies were implemented such as the PPnBM facility policy borne by the government to leverage consumption.

The increase in exports and imports also indicates an economic recovery in the second quarter of 2021. The recovery of Indonesia’s trading partner countries triggers demand for exports of various commodities that drive the pace of economic growth. In East Java, commodities such as jewelry, copper and fats and oils were the largest exports during the quarter.

Meanwhile, for imports, although it suppresses economic growth, indications of the types of commodities being imported are types of auxiliary materials or raw materials for the production process. Among the main imported commodities in East Java are plastic goods, grains, and seeds. Another important thing in this import activity is the high import of capital goods such as imports of machinery, iron, and steel. This capital goods import framework provides clarification of the direction of expansionary economic improvement.

Economic performance in the second quarter of 2021 cannot be separated from the existence of several religious moments such as Eid al-Fitr, Easter, and several other activities. Even though the government has strictly implemented an isolation policy to reduce the impact of Covid-19 transmission through travelers. However, the movement of the economy is still felt in the community. This is indicated by the q to q growth of 1.78 percent, better than the first quarter of 2021.

In East Java, outside of the agriculture, forestry and fisheries categories, which contracted 3.14 percent, all categories showed positive and impressive performance. The contractions that occur are mainly due to seasonal effects, not due to the influence of Covid-19. There was a change in the peak of harvest, in the sub-category of food crops, namely the peak of harvest, back to the first quarter.

Meanwhile, the highest growth occurred in other service categories, which grew 41.21 percent. Next is the category of transportation and warehousing as well as the category of providing accommodation and food and drink, which grew 22.67 percent and 14.81 percent, respectively. When the category is a supply chain of tourism activities. This shows the tourism category is starting to recover from the pressure that has been deeply impacted by the pandemic since last year. Several policies, such as the opening of tourism sites with strict protocols, indicate the right direction of economic relaxation.

The increase in people’s purchasing power is reflected in the increase in household consumption expenditure (PKRT). On a y on y basis, PKRT rose 5.24 percent and q to q increased by 2.13 percent. This increase was due to the opening of entertainment venues, increased consumption of transportation modes and the increasingly massive use of the internet due to the impact of WFH (Work From Home) and SFH (School From Home).

However, despite all the economic improvements above, it must be understood that very high growth is also due to the Low Base Effect. Economic growth in the second quarter of 2020 last year experienced a very deep contraction of 5.90 percent. The deep contraction occurred because at that time was the peak of the cessation of population mobility which resulted in a contraction of the economy. Thus, the annual economic movements recorded in East Java’s y on y growth seem to show impressive growth.

Several economic measures such as hotel occupancy rates, the level of use of several modes of transportation, or other indicators such as tourist ticket revenues indicate a better direction of performance than the situation in 2020. However, this situation has not exceeded the situation that is considered normal in 2019. So an impressive increase in growth the economy, apart from improving economic performance, the Low Base Effect was also helped.

*) Statistics at BPS East Java Province.

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