The success of international events in the midst of disaster recovery
In the month of September 2018, disasters hit the area of Central Sulawesi, especially in Palu, Donggala and Sigi. A huge earthquake created deadly tsunamis and flooding, which especially hit Palu just shortly after the earthquake. That earthquake followed another large earthquake that hit Lombok Island few weeks earlier. At the time of the Lombok earthquake, Indonesia hosted the Asian Games in Jakarta and Palembang. Meanwhile, after the earthquake in Palu, Indonesia hosted the Asian Para Games, and at the same time also hosted the annual Meetings of the IMF and the World Bank in Bali. Indonesia was very fortunate that all the international events were conducted successfully.
The recovery process is ongoing, and there is hope that the city of Palu may be rebuilt relatively more quickly than the disaster-affected area in Lombok. The affected area in Palu is more concentrated, which enables faster evacuation and recovery, while the affected area in Lombok is more dispersed, which requires more time for evacuation and recovery. From the preliminary calculation, the total loss from damages may reach around Rp. 10 trillion or around $700 million. The Indonesian government has room for that expenditure. However, the World Bank also offered a loan for the disaster recovery program in the amount of $1 billion.
Despite those natural disasters, Indonesia successfully conducted a festive 2018 Asian Games, the second largest sports event after the Olympic Games. The success in organizing the Asian Games led the president of the Olympic Committee to offer Indonesia to bid to host the Olympic Games in 2032. Similarly, the success of the Annual Meetings of the IMF and the World Bank also drew praise from international organizations as well as officials from various countries that attended the meeting.
The organization of the events took place at a time when Indonesia is preparing for next year's presidential election, which certainly added flavor to the event. The opposition party accused the Indonesian government of spending too much money on the “lavish” event. The success of the events certainly gave an advantage to the incumbent President.
On the external front, Central Board of Statistics reported a surplus in the balance of trade report for September 2018. However, both exports and imports were lower than the previous month, with imports declining more sharply than exports. Exports in the month reached $14,828.6 million, down by 6.58% from the previous month, although 1.7% higher year over year. Meanwhile, imports reached $14,601.5 million, down 13.18% month over month, but 14.18% higher year over year. Therefore, the trade balance was reported with a surplus of $227.1 million. With the surplus in September 2018, the total trade balance for the first nine months of 2018 remained in deficit of $3,781.9 million.
The Central Board of Statistics also released the Inflation report, which showed deflation of 0.18% for the month of September. With that performance, year-over-year inflation stood at 2.88%, below the floor of the target corridor of the Central Bank. Such mild inflation, as well as the benign external balance, led the Central Bank to keep the benchmark interest rate at 5.75% at its Monetary Policy Meeting in October 2018.
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