Impact Of The COVID-19 Pandemic, Indef Prediction Of Economic Growth In 2021 Is Only 3 Percent

JAKARTA - The Institute for Development of Economics and Finance (Indef) projects that economic growth in 2021 will only be 3 percent. Indonesia's economic growth is not expected to fully recover next year.

Executive Director of Indef Tauhid Ahmad said, as the pandemic has not been able to be resolved, the road to economic recovery in 2021 is not a smooth road so that the economy can go fast without obstacles.

"With all the global and domestic developments, we estimate that the updating of our calculations in 2020 will have our economic growth at minus 1.35 and in 2021 at 3 percent," he said in a virtual discussion, Monday, November 23.

Tauhid said, the COVID-19 pandemic also caused the middle and upper class to hold back on spending. This is the main factor in the low economic growth forecast for the next year. In fact, he said, middle class consumption contributes 56 to 57 percent of economic growth.

"Middle class spending is still on hold. So that it still haunts the middle class to consume," he said.

In addition, the second factor hampering economic growth is the rate of growth in bank credit, which is estimated to be only around five to six percent. This projection is half of normal credit growth, which reached 11 percent.

"Credit is like blood. If we run, the blood is half of normal capacity, so this means that demand is not yet normal, the implication is that the process of economic growth is still on hold," he explained.

Tauhid said that the limited supply of the COVID-19 vaccine will also affect national economic growth next year. Procurement of the vaccine itself is predicted to occur in the second semester of 2021 and there is the possibility of limited distribution.

"With this assumption it will hamper the process of economic recovery. Because physical activity is very disrupted for both trade, the production sector, including in the end, has implications for the service sector, especially tourism. This is finally the eagerly awaited vaccine, which we will finally see in 2021 economic growth. by 3 percent, "he said.