Sri Mulyani: Economic Growth In The Minus Range Of 0.4 Percent-2.3 Percent Due To COVID-19

JAKARTA - Minister of Finance Sri Mulyani explained the worst scenario for Indonesia's economic growth due to the corona virus pandemic or COVID-19. According to Sri, the toughest scenario is the projection for Indonesia's economic growth of around 2.3 percent. However, in the worst case scenario, the Indonesian economy could be minus up to 0.4 percent.

"Based on the assessments we saw earlier, Bank Indonesia, OJK and the Ministry of Finance estimate that economic growth will fall to 2.3 percent, even in the worst case scenario it could be minus 0.4 percent," he said, in a video conference with journalists and journalists in Jakarta. , Wednesday, April 1.

As is known, the 2020 State Budget target sets the APBN growth at 5 percent. However, due to the conditions of the COVID-19 pandemic which is increasingly widespread, economic growth this year is far from that number.

Sri Mulyani said that the risk from the COVID-19 pandemic is also projected to touch the financial sector. In current conditions, the risk of default on credit or an increase in the ratio of bad loans (non-performing loans / NPLs) will increase.

According to Sri Mulyani, this risk could occur because many companies could not continue their production activities and caused debt repayments to be hampered.

"So that this condition will cause a decline in economic activity. It can also put pressure on financial institutions because credit cannot be repaid," he explained.

Sri Mulyani explained that the outlook for economic growth had decreased by 2.3 percent and even contracted to minus 0.4 percent due to declining household consumption and pressure on investment growth.

Because according to him, the household sector is the most affected by the COVID-19 virus outbreak. In fact, it is estimated that they will experience a significant decline in terms of consumption because they no longer carry out activities outside of their homes so that consumption will decline quite sharply.

"Household consumption decreased between 3.23 percent and 1.6 percent. Government consumption, in this case we will maintain, therefore the deficit will increase. Investment will decline from the growth we previously estimated at 6 percent to 1 percent or even negative. 4 percent, "he said.

Not only that, Sri Mulyani also explained that export performance will also experience a deeper contraction, as will import performance.

"Yesterday's exports have had negative growth for almost a year. That has also experienced a deeper growth. Our imports have also experienced negative growth," he said.

On the other hand, Sri Mulyani explained, even the Micro, Small and Medium Enterprises (UMKM) sector has been proven to be able to withstand any crisis conditions. However, due to the COVID-19 pandemic, it is estimated that they will be hit in the front due to the absence of social activities. In fact, during the 1998 crisis, MSMEs were able to support the Indonesian economy.

"MSMEs, which are usually a safety net, have suffered a major blow due to restrictions on social activities. When faced with the conditions in 97-98, MSMEs were resilient, now MSMEs are being hit at the front because there are no activities outside the home by the community," he said.