The impact of the COVID-19 pandemic on the country's national economy: The Indonesian experience

https://doi.org/10.35912/jgas.v4i1.1550
Published: Sep 30, 2024

Abstract:

Purpose: This study aims to examine the effects of inflation, exchange rates, and the Covid-19 pandemic on Indonesia's trade balance position and to develop an empirical estimation model to predict its position.

Method: The data used in this research are the inflation rate, exchange rate of rupiah to the US dollar, export value, and import value of Indonesia from January 2012 to March 2021. The econometric model used in this study was a binary logistic regression model.

Results: The results indicate that The regression coefficient of the inflation rate is negative at 0.3621, with an odds ratio of 0.696. This suggests that 1 percent in inflation reduces the probability of a trade balance surplus of 0.696. The regression coefficient for the exchange rate was positive at 2.18, with an odds ratio of 8.85. This means that every 2.72 rupiah increase in the exchange rate raises the probability of a trade balance surplus of 8.85 times. However, this study does not find empirical evidence that inflation, exchange rates, and pandemic of Covid-19 have no impact on the position of Indonesia's trade balance.

Limitations: This study focuses on two factors believed to influence the position of trade balance in Indonesia: the inflation rate and foreign exchange rates.

Contributions: This study provides insights into government policy.

Keywords:
1. Inflation
2. Exchange Rate
3. Trade Balance
4. Pandemic Covid-19
5. Binary Logistic Regression Model
Authors:
1 . Algifari Algifari
STIE YKPN Business School Yogyakarta, Indonesia
2 . Haryono Subiyakto
STIE YKPN Business School Yogyakarta, Indonesia
3 . Isnanda Zainur Rohman
STIE YKPN Business School Yogyakarta, Indonesia
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How to Cite
Algifari, A., Subiyakto, H., & Rohman, I. Z. (2024). The impact of the COVID-19 pandemic on the country’s national economy: The Indonesian experience. Journal of Governance and Accountability Studies, 4(1), 61–70. https://doi.org/10.35912/jgas.v4i1.1550
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Issue & Section
Vol. 4 No. 1 (2024): January
Articles
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This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

References

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  1. Alamsyah, M. I., Wibisono, C., & Satriawan, B. (2023). Analysis of factors affecting the quality of Bintan District government financial reports. Journal of Governance and Accountability Studies, 3(1), 13-27.
  2. Anshari, M. F., El Khilla, A., & Permata, I. R. (2017). Analisis Pengaruh Inflasi Dan Kurs Terhadap Ekspor Di Negara Asean 5 Periode Tahun 2012-2016. Info Artha, 1(2), 121-128.
  3. Ati, H., & Asnawi, A. (2018). Pengaruh Produk Domestik Bruto, Suku Bunga, Kurs terhadap Neraca Perdagangan Di Indonesia. Jurnal Ekonomi Regional Unimal, 1(1), 1-7.
  4. Azaria, V., & Irawan, A. (2019). Pengaruh Inflasi, Nilai Tukar Rupiah, dan Harga terhadap Volume Ekspor Indonesia Komoditas Kelautan dan Perikanan Menurut Provinsi (Periode 2012–2014). Journal of Applied Managerial Accounting, 3(1), 1-8.
  5. Badrudin, R. (2013). Money Nexus antara Perkembangan Fungsi Uang dan Dampaknya terhadap Inflasi di Indonesia. KINERJA, 17(1).
  6. Badrudin, R. (2018). Nexus of Money Function and Its Effect on Inflation Rate in Thailand and Indonesia. International Journal of Engineering & Technology, 7(3.21), 67-72.
  7. Baharumshah, A. Z. (2001). The effect of exchange rate on bilateral trade balance: new evidence from Malaysia and Thailand. Asian Economic Journal, 15(3), 291-312.
  8. Eke, I. C., Eke, F. A., & Obafemi, F. N. (2015). Exchange rate behaviour and trade balances in Nigeria: An empirical investigation. International Journal of Humanities and Social Science, 5(8), 1.
  9. Ferdaus, F., & Zaimasuri, Z. (2023). Implementation of public information disclosure policy in the house of Representatives of the Republic of Indonesia. Journal of Governance and Accountability Studies, 3(1), 29-50.
  10. Islam, M. A. (2013). Impact of inflation on import: An empirical study. International Journal of Economics, Finance and Management Sciences, 1(6), 299-309.
  11. Jacob, T., Raphael, R., & Ajina, V. (2021). Impact of exchange rate and inflation on the export performance of the Indian economy: An empirical analysis. BIMTECH Business Perspective, 1-13.
  12. Junaedi, D., & Salistia, F. (2020). Dampak Pandemi COVID-19 Terhadap Pertumbuhan Ekonomi Negara-Negara Terdampak. Simposium Nasional Keuangan Negara, 2(1), 995-1013.
  13. Khatun, M. A., Baten, M. A., Farukh, M. A., & Faruk, M. O. (2022). The impact of climate change on ecosystem services and socio-economic conditions of Char Dwellers in Northern Regions of Bangladesh. Journal of Governance and Accountability Studies, 2(1), 29-48.
  14. Mankiw, N. G. (2018). Macroeconomics (10th ed.).
  15. Nopeline, N., & Siahaan, M. (2020). Analisis Pengaruh Nilai Tukar dan Inflasi Terhadap Neraca Perdagangan di Indonesia. Jurnal Visi Ilmu Sosial dan Humaniora (VISH), 1(1), 65-72.
  16. Noviana, T. N., & Sudarti, S. (2018). Analisis Pengaruh Inflasi, Kurs Tukar, Dan Jumlah Produksi Terhadap Ekspor Komoditi Karet Di Indonesia. Jurnal Ilmu Ekonomi, 2(3), 390-398.
  17. Okeke, N. L., Ezeala, G., Okoye, N. J., & Egbunike, C. F. (2023). Treasury Single Account (TSA) and cost of governance: Survey of MDAs in Anambra State. Journal of Governance and Accountability Studies, 3(1), 1-11.
  18. Pak, A., Adegboye, O. A., Adekunle, A. I., Rahman, K. M., McBryde, E. S., & Eisen, D. P. (2020). Economic consequences of the COVID-19 outbreak: the need for epidemic preparedness. Frontiers in public health, 8, 241.
  19. Prameswari, M., Indrawati, L. R., & Laut, L. T. (2019). Analisis Pengaruh Utang Negeri, Kurs Dollar, Dan Inflasi Terhadap Cadangan Devisa Indonesia Tahun 2008-2017. DINAMIC: Directory Journal of Economic, 1(4), 457-466.
  20. Purusa, N. A., & Istiqomah, N. (2018). Impact of FDI, COP, and inflation to export in five asean countries. Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi Dan Pembangunan, 19(1), 94-101.
  21. Putri, R. F. A., & Suhadak, S. S. (2016). Pengaruh inflasi dan nilai tukar terhadap ekspor indonesia komoditi tekstil dan elektronika ke Korea Selatan (Studi Sebelum dan Setelah ASEAN Korea Free Trade Agreement Tahun 2011). Jurnal Administrasi Bisnis (JAB), 35(1).
  22. Rahmawati, D. M. (2014). Pengaruh Kurs dan GDP terhadap Neraca Perdagangan Indonesia Tahun 1980-2012. Economics Development Analysis Journal, 3(1).
  23. Rahmawati, E. Y. (2020). Analisis Pengaruh Ekspor dan Kurs Terhadap Cadangan Devisa Indonesia Tahun 1990-2019. Ecodunamika, 3(2).
  24. Salvatore, D. (2015). International Economics: Wiley.
  25. Sari, T. N., & Rauf, A. (2018). DAMPAK INFLASI TERHADAP EKSPOR DAN IMPOR DI INDONESIA PERIODE TAHUN 2013–2017. Dynamic Management Journal, 2(2).
  26. Soeharjoto, G. K. D. (2020). Pengaruh Makro Ekonomi Terhadap Cadangan Devisa Di Asean-5. Jurnal Ecodemica, 4(1).
  27. Stockman, A. C. (1985). Effects of Inflation on the Pattern of International Trade. Canadian Journal of Economics, 587-601.
  28. Trinh, P. T. T. (2014). The impact of exchange rate fluctuation on trade balance in the short and long run: the case of Vietnam. Journal of Southeast Asian Economies, 432-452.
  29. Ukwuoma, H. C., Cirman, N. E., & Oye, P. O. (2022). The role of e-Government in overcoming the consequences of the COVID-19 pandemic in Nigeria. Journal of Governance and Accountability Studies, 2(1), 79-92.
  30. Yaya, M. E., & Lu, X. (2012). The short-run relationship between real effective exchange rate and balance of trade in China. International Journal of Applied Economics, 9(1).
  31. Yazidi, J. (2013). Impact of Exchange Rate on Trade Balance., The Open University of Tanzania.