"The current account deficit in the first quarter of 2020 fell owing to a decline in imports coupled with the domestic economic slowdown," Head of the Communication Department of Bank Indonesia Onny Widjanarko noted in a written statement released on Wednesday.
The fall in imports eased the impact of decreasing exports as a result of contraction in the global economic growth leading to a trade surplus, he noted.
The deficit also resulted from a declining deficit of service balance, especially from transportation service, along with the declining imports of goods and the lowering surplus of travel service owing to a decline in the number of tourist arrivals in the country, he pointed out.
"Moreover, the primary income balance also affected the declining current account deficit along with the domestic economic activities," he stated.
Bank Indonesia also recorded that capital and financial transactions in the initial three months of 2020 fell considerably owing to the high level of global financial market uncertainty.
Capital and financial transactions recorded a deficit of $2.9 billion, especially due to the portfolio investment deficit, after booking a surplus of $12.6 billion in the previous quarter.
"The portfolio investment deficit was caused by capital outflow amid heightened turmoil in global financial markets over the COVID-19 pandemic," he remarked.
Under these current circumstances, Bank Indonesia has forecast the current account deficit at the end of 2020 to lie below two percent of the GDP, or fall short of the previous projection of 2.5-3.0 percent of the GDP. Related news: Ministry readies protocols for film industry amid COVID-19 pandemic
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