DM Monitoring
JAKARTA: Indonesia’s economy has finally plunged into a recession after experiencing minus growths in two consecutive quarters this year.
Finance Minister Sri Mulyani Indrawati has recently said if the country’s economic growth underwent contractions in two successive quarters, its economy would enter a recession.
Head of the Central Agency of Statistics Suhariyanto announced that Indonesia’s economy contracted by 3.49 percent in the third quarter 2020.
Thus, Indonesia officially entered its recession like other countries did as they experienced negative economic growths within two consecutive quarters during the COVID-19 pandemic, Suhariyanto told journalists.
The realization of the economic growth in the third quarter was worse than President Joko Widodo’s estimation at minus 3 percent and Indrawati’s prediction at minus 2.9 percent.
The agency has earlier announced that the Indonesian economy contracted by 5.32 percent in the second quarter this year due to the COVID-19 pandemic which has been battering the country’s economic activities.
Although experiencing negative growth, the Indonesian economy increased by 5.05 percent quarterly (quarter-to-quarter) in the third quarter 2020, showing a signal of a significant recovery, he said.
“Compared to the economic growth in the second quarter, that in the third quarter is better. Indonesia’s economic growth in the second quarter experienced a deeper contraction,” Suhariyanto noted.
Despite the current recession, the Southeast largest country remains optimistic that its economy would continue to grow in a positive trend as indicated by the 5.05 percent increase quarterly in this year’s third quarter.
“We have passed the worse period in the second quarter. In the third quarter, the economy has reached the turning point to a positive zone,” Finance Minister Indrawati said in a press statement on Thursday.
The realization of state budget drastically increased by up to 15.5 percent in the third quarter, the minister said, adding that the budget was distributed to social assistance and business communities including small and medium scale enterprises which have been playing a role in the country’s economic improvement.
In general, improvement was also seen in expenditures including the government’s consumption which underwent a positive growth of 9.8 percent in the third quarter compared to negative 6.9 percent in the previous three months, she said.
The export performance increased from minus 11.7 to minus 10.8 percent, but the import performance dropped from minus 17 percent to minus 21.9 percent, while the household consumption grew from minus 5.5 percent to minus 4 percent.
“In the future, the government will continue to make efforts to accelerate the national economic recovery, particularly accelerating regional budgets which now only reach 53.3 percent,” the minister was quoted by Pikiran-rakyat.com as saying.
In the health sector especially in mitigating the COVID-19 pandemic, the government would continue to conduct testing, tracing and treatment measures including preparing vaccines, she added.
“We hope the turning point would continue in the fourth quarter, and we have to take advantage of the momentum in the third quarter to recover the economy in 2021,” she asserted.
However, she admitted that amid the optimism, the government is still facing challenges, especially that on the increase in the unemployment due to the COVID-19 outbreak.
The Central Agency of Statistics reported that the unemployment rate in Indonesia rose by almost 2.7 million people in the third quarter bringing the total number to 9.7 million.
Economic observer from the Center of Reform on Economics (Core) Indonesia Mohammad Faisal opined that the economic contraction by 3.49 percent was still deep as the government has eased the large-scale social restrictions to curb the COVID-19 infections during that period.
“I thought before that the contraction was not that deep although it was better than that in the second quarter,” Faisal told Antara news agency on Thursday.
According to him, the realization of the economic growth should be put into notice because the relaxation of the large-scale social restrictions has yet to make big changes.
“It means that there is a potential in the next several quarters that our economy would contract,” he added.
He suggested that the economy be generated by consumptions mainly by the middle-up group of people who are seen still to hold their expenditures during the pandemic.
Meanwhile, the policy on the national economic recovery was made to create resilience of the people who are affected by the pandemic but not to make the economy grow positively.
President Joko Widodo signed a presidential regulation about the Committee on the Coronavirus Disease (COVID-19) Mitigation and the National Economic Recovery on July 20.
Chairman of the committee is Coordinating Minister for Economic Affairs Erlangga Hartarto with six vice chairmen, and one executive chairman.
