Sri Mulyani: All Countries Have Entered Recession, Indonesia Has Also Affected It

Minister of Finance, Sri Mulyani Indrawati. (Photo: Setkab)

JAKARTA - Minister of Finance (Menkeu) Sri Mulyani projects that all countries will experience a recession. This is because the COVID-19 pandemic has put pressure on the economies of all countries, which has caused the economy throughout the country to experience a decline.

According to Sri Mulyani, the development of the COVID-19 case affected economic activity and projections for Indonesia's economic growth. This includes other countries too. He said that the second quarter of this year was the toughest for the whole country.

Indonesia, said Sri Mulyani, contracted 5.32 percent in the second quarter of this year. However, other countries experienced even deeper contraction. Russia minus 8.5 percent, Hong Kong minus 9 percent, US minus 9.5 percent, Japan minus 9.9 percent, Germany minus 11.7 percent, and all ASEAN countries minus 5 percent, Thailand minus 12.2 percent, Singapore minus 13.2 percent, the Philippines minus 16.5 percent, and Malaysia minus 17.1 percent. In fact, India's contraction is close to 24 percent.

Then, Sri Mulyani said, countries in Europe also experienced negative economic growth. The contraction is even above 20 percent such as Spain, UK and France.

"If we look at the third quarter, their forecast has not yet reached the positive zone. Even though they are still contracting and still deep enough. This is something that illustrates that all countries have entered a recession in technical terms. Some have even started in the first quarter as negative. "The forecast is negative, they could be negative three quarters in a row," he said, in our APBN press conference, Tuesday, September 22.

The Ministry of Finance itself has revised the prediction of Indonesia's economy in the third quarter, which was initially optimistic that it would be in the positive zone, to negative. From minus 1.1 percent to positive 0.2 percent, to minus 2.9 percent to minus 1.0 percent.

Sri Mulyani said that a number of international agencies also predicted that this year's global economic growth would be minus. One of them, the IMF estimates that global economic growth will be at a level of minus 4.9 percent.

"The World Bank is minus 5.2 percent, and the OECD predicts it is at a minus 4.5 percent level. This is better than the OECD projection in June which said it could be minus 6 to minus 7.6 percent," he said.

In the next year, said Sri Mulyani, international institutions estimate that world economic growth will be in the range of 4 percent to 5 percent. This means that there will be economic improvement in 2021.

"This is the consequence this year is decreasing and we assume that the condition of COVID-19 can be maintained and that a vaccine will be available which will improve the condition of economic activity. Then also the stimulus of all countries can have an impact on the minimum economic decline or economic strengthening next year," he said.