Sri Mulyani: Economic Recovery Starts In The Third Quarter Of 2020

JAKARTA - Finance Minister Sri Mulyani predicts that Indonesia's economic recovery will occur in the third quarter of 2020. Meanwhile, in the second quarter of 2020, the national economic growth is estimated to be minus 3.1 percent.

Sri Mulyani admitted that the contraction that occurred in the second quarter of 2020 was quite deep compared to the realization on May 31 of 2.97 percent. One of the factors that caused national economic growth to decline was due to the imposition of large-scale social restrictions (PSBB).

Furthermore, Sri said, the PSBB policy was enforced in areas that had a very large contribution to the national economy, namely DKI Jakarta covering Jabodetabek, Central Java, East Java and West Java.

"Even though in the first quarter it was positive, we expect a contraction in the second quarter due to PSBB. We estimate negative, minus 3.1 percent," he said, in a virtual press conference entitled 'Our State Budget', Tuesday, June 16.

However, Sri Mulyani predicts that in the third and fourth quarters of the national economy there will be improvements. In fact, he is optimistic that economic growth until the end of this year will still be positive in the range of 2.7 percent.

"With the dynamics in the second quarter, there was improvement in the third quarter, so from the side of the 2020 State Budget, economic growth is still at 2.7 percent," he explained.

He explained that one of the factors that gave hope was the positive sentiment of global investors on the domestic financial market and stock market. "The sentiment that was volatile and negative has become hopeful," he said.

Then, the burden of paying government bonds yield or interest also began to decrease. "From the financial indicators, the government bond yield is better. We are working on this stability in the context of economic recovery," said Sri Mulyani.

In the second quarter of 2020, he said, almost all countries experienced contractions due to the impact of COVID-19. In the ASEAN region, negative economic growth in the second quarter is also predicted to occur in Singapore and Malaysia, namely minus 6.8 percent and 8.0 percent, respectively.

"India, which uses a lockdown, is experiencing a very deep contraction of minus 12.4 percent," he said.

Meanwhile, in developed countries, such as the United States it is projected at minus 9.7 percent, Britain at minus 15.4 percent, Germany at minus 11.2 percent, France at minus 17.2 percent, and Japan at minus 8.3 percent.

"With negative economic growth in the second quarter, it is very difficult to keep the economy positive. All institutions make negative economic projections, only a few are positive," he explained.