Jokowi: If We Used To Have A Lockdown, Economic Growth Could Be Reduced To 17 Percent

JAKARTA - President Joko Widodo (Jokowi) considered the government's steps to impose restrictions rather than implement regional quarantine or lockdowns in the face of the COVID-19 pandemic. Because, if at that time his government took steps to quarantine the area, economic growth in Indonesia could have had a quite fatal impact.

"I can't imagine if we had a lockdown before. Maybe it could be minus 17 percent," Jokowi said in his briefing to governors regarding the acceleration of the 2020 APBD absorption, as quoted on the Cabinet Secretariat website, Friday, July 17.

It is known, when the COVID-19 pandemic occurred in Indonesia, a number of calls for regional quarantine or lockdown from various parties including academics emerged. This actually aims to prevent transmission of the virus in the community.

However, at that time the government chose to implement large-scale social restrictions (PSBB) and still allowed several sectors of the economy to continue moving.

Returning to Jokowi's direction, he said that the first quarter of the economy this year economic growth in Indonesia was still positive at 2.97 percent. Meanwhile, in the second quarter, the former governor of DKI Jakarta admitted that he had received a prediction that economic growth in Indonesia would reach minus 4.3 percent.

Although it fell to minus 4.3 percent, Jokowi said, this figure was still better than other countries. Moreover, based on predictions from the Organization for Economic Co-operation and Development (OECD), a number of countries experienced minus economic growth reaching tens of percent due to the COVID-19 pandemic.

"I received it from the OECD, France, for example, the figure was minus 17.2 percent. Britain was minus 15.4 percent, Germany was minus 11.2 percent. America was minus 9.7 percent. Minus everything. There is nothing plus minus countries," he said.

So that to encourage economic growth, President Jokowi then asked regional heads to take advantage of the third quarter which falls in July, August, and December by making expenditures. Because, in the midst of a pandemic like now, it will be difficult to hope that the economy can grow because of investment.

"Therefore, do not let anyone brake. If the economy is in your province, all mothers want to recover quickly, their spending must be accelerated. The key is only there," he said.

"We can no longer expect investment, private sector, no. Because this emergence must come from government spending," added the former mayor of Solo.

Seeing President Jokowi's request, Center of Economic Reform (CORE) Research Researcher Piter Abdullah assessed that the request for regional governments to spend their APBD on a large scale was appropriate. Because, as long as the pandemic still occurs, it will be difficult to increase economic growth if the government continues to hope for investment.

"Both foreign investment (PMA) and domestic investment (PMDN) will certainly slow down or even contract," Pieter told reporters.

The COVID-19 pandemic, he said, actually does not only limit the movement of goods and people, but also the flow of money. This in turn causes public consumption to decline and is followed by a decline in investment interest.

"The level of sales has dropped, production has not moved, resulting in no need for new investment," he said.

So, the regional spending instructions as conveyed by Jokowi are expected to be the main solution for fiscal stimulus in the form of social assistance. The goal is to hold back the decline in purchasing power.

He also assessed that in the midst of the COVID-19 pandemic, it seems difficult if he hopes that economic growth can occur in a high and positive manner. "What can be done is to hold the contraction from getting too deep and save the business world from collapsing," he concluded.