The Condition Of The Indonesian Capital Market Has Entered The Yellow Light, Economic Recession Can OCCUR After Eid

JAKARTA - Director of the Center of Economic and Law Studies (Celios), Bhima Yudhistira, assessed that the current situation in the Indonesian capital market has entered the yellow light stage and has the potential to cause the Indonesian economic recession after Eid.

According to him, this is due to the movement of Asia's Weakest Composite Stock Price Index (JCI), and an anomaly in the middle of most Asian stock indexes showing an increase.

Bhima said the sharp decline in the stock market could not be separated from investor sentiment towards various factors, such as worsening fiscal performance, revision of the TNI Law, skepticism about Danantara governance, and reduced people's purchasing power.

"The sharp stock market correction cannot be separated from investor sentiment towards a combination of worsening fiscal performance factors, the revision of the TNI Law, skepticism about Danantara governance, people's purchasing power has decreased, confirmed by imports of consumer goods ahead of Ramadan -21.05 percent," he told VOI, March 18.

Bhima conveyed that today's market sentiment was also influenced by the polemic of the revision of the TNI Law, which sparked negative sentiment in the market.

Therefore, Bhima reminded that the risk of the TNI entering civilian positions could reduce Indonesia's economic competitiveness, increase the potential for conflicts of interest, and open up gaps for corruption.

"Indeed, there is a Trump protectionism policy factor that disrupts the stock market in developing countries, but Indonesia's domestic factor has a bigger contribution," he said.

Bhima assessed that Indonesia's domestic factors are more influential and if this condition continues, foreign investors will most likely continue to carry out sell-offs.

"If the trading stop means that foreign investors will continue to sell off. The capital market after the Eid holiday is still not certain whether there will be a rebound," he said.

"(Potential) economic recession after Eid," he added.

Bhima suggested that the revision of the TNI Law be canceled to ease temporary market tensions.

According to him, if the capital outflow continues, it can be an indication of an economic recession and cause there are concerns that the accumulation of negative factors affecting the Indonesian economy will reach its peak in the near future.

"If the capital outflow continues, it can be an indication that it leads to an economic recession, there are concerns that the accumulation of factors that will reduce Indonesia's economic performance will peak in the near future," he explained.

Bhima said that if a recession occurs, it will cause mass layoffs and social conflicts in various regions to become a reality.

For information, the Composite Stock Price Index (JCI) closed down 248.56 points, down 3.84 percent to 6,223.39 at the end of trading Tuesday, March 18.