The government, Bank Indonesia (BI), to observers have predicted the economy will experience negative growth (economic recession) due to the Covid-19 pandemic.
Finance Minister Sri Mulyani Indrawati predicts that the Indonesian economy will be depressed to the point of -4.3 percent.
“So we expect contraction in the second quarter. I say here (the contraction range between) minus 3.5 percent to minus 5.1 percent. Point (middle value) is minus 4.3 percent,” Finance Minister Sri Mulyani Indrawati said in RI Parliament Building, Wednesday (07/15/2020).
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Similar to Sri Mulyani, Bank Indonesia (BI) projects that economic growth in the second quarter of 2020 will experience pressure with negative growth between 4 percent and 4.8 percent.
BI Senior Deputy Governor Destry Damayanti explained that the process of Indonesia’s economic recovery would take place very slowly or in the form of a U-Shape, because it was facing very difficult times.
“In the second quarter, the Ministry of Finance (predicting Indonesia’s economic growth) was negative 4 percent. (Projected) BI is approximately the same, between 4 percent and 4.8 percent. That’s our range. With U-shaped recovery, (recovery) is relatively slow,” Destry said in a video conference in Jakarta, Monday (7/20/2020).
Meanwhile, Bank Permata Economist, Josua Pardede projected economic growth in the second quarter of 2020 to contract 4.72 percent annually (year on year / yoy).
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Many causes that make the economy depressed, such as decreased household consumption, decreased consumer confidence index, car and motorcycle sales contracted, PMTB is expected to grow negatively, and so on.
The lack of Indonesia’s economic growth is believed to continue in the third quarter of 2020. Technically, if the economy in the third quarter returns to negative growth, RI will enter a recession.
This phenomenon is the first time since the crisis in 1998.
Indirectly, the government has indicated that Indonesia can enter the recession in the third quarter of 2020, following the negative contraction of economic growth or minus since the second quarter of 2020.
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Finance Minister Sri Mulyani Indrawati projects Indonesia’s economic growth to be minus 3.8 percent in the second quarter of 2020. As for the third quarter of 2020, Indonesia’s economic growth could be minus 1 percent or grow 1.2 percent.
Meanwhile, Senior Economist of the Institute for Development of Economics and Finance (Indef) Faisal Basri believes Indonesia will experience a recession.
From its calculations, Indonesia’s economic growth is predicted to grow minus in the second quarter of 2020 with a range of minus 2.8 percent to minus 3.9 percent.
Recession or not, for example China
Regardless of the recession or not, Josua Pardede suggested Indonesia to reflect on China. The positive growth of this Bamboo Curtain country deserves a thumbs up after posting steep negative growth.
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Information alone, China had recorded a 6.8 percent contraction in GDP in the first quarter of 2020 since the Covid-19 pandemic attacked it at the end of 2019. But economic growth again touched a positive figure of 3.2 percent in the second quarter of 2020, although Xi Jinping State did not dare to target growth economy throughout 2020.
Indonesia, said Josua, needs to mitigate the emergence of recession before it’s too late. The trick is to accelerate the distribution of social assistance on target in the form of cash and other stimuli that can sustain the economy.
Even though there will be a recession, the acceleration of the distribution of stimulus will make the economy positive again in the fourth quarter of 2020.
“He (China) is not only a quick stimulus, but his handling of Covid is also very good. So it means, this should be an example of success as a country that can come out of recession traps or snares of recession,” Josua told Kompas.com, Monday (3) / 8/2020).
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