Indef Asks Government Not To Rely On Consumption To Maintain Economic Growth

JAKARTA - The Institute for Development of Economics and Finance (Indef) said that so far the government has always relied on high consumption in the private sector and households to drive the economy.

Therefore, Indef asked the government not to rely on the consumption sector in the long term to maintain national economic growth.

Deputy Director of INDEF Eko Listiyanto said that in order to maintain healthy economic growth, the government must focus on three things. First, investment. Both exports. Third, domestic consumption. With these three things, according to Eko, the economic recovery hit by the COVID-19 pandemic can be accelerated.

"In the long term, quality growth that can accelerate, must rely on investment and exports. In the short term, Indonesia's economic characteristics are quite high in terms of consumption, which is meant by the private sector or households," he said in a virtual discussion, Friday, September 10.

During the COVID-19 pandemic, global and national economic conditions were hit hard. In fact, said Eko, the domestic consumption sector, which is usually the savior of the economy during a crisis, is now unreliable.

Eko explained, looking at the Bank Indonesia (BI) report, the level of domestic consumption was at the level of 77.3 percent in August 2021. This figure was included in the pessimistic level category because it was below 100 percent.

"The previous month in July, the figure had fallen by 80 percent, so it's been two months in a row that the figure fell from the previous position of above 100 percent. So previously, it was optimistic, now it is pessimistic again," he said.

Eko said the handling of the COVID-19 pandemic was the key to revive domestic consumption. He said, this was reflected in developed countries where consumption levels were above 100 percent when the outbreak could be handled properly.

"Consumer confidence indices for developed countries, say the United States (US), Europe, Japan or China, which may soon become developed countries or say countries with large populations show that their consumption has strengthened or is starting to recover," he said.