South Korean Recession Benefits Indonesia's Position, INDEF: Many Investments Will Come In

JAKARTA - A senior researcher at the Institute for Development of Economics and Finance (INDEF) Aviliani thinks that the economic recession that hit South Korea will benefit Indonesia's position. This is because there will be a shift in investment from foreign companies from Gingseng to the country.

At present, said Aviliani, the trend of moving investment locations from South Korea to Indonesia has been seen, such as in the banking sector. This shows that Indonesia's potential is still good.

"South Korea itself does not have a big impact on Indonesia, in fact we benefit. With a recession we will actually benefit from a lot of investment coming in," he said, during the Indef webinar entitled 'Challenges to Arrange the Architecture of the Financial Sector in the Middle of a Global Pandemic', Thursday, July 23. .

Aviliani explained, these benefits will not only be felt when South Korea recession. Other countries that have the potential or are already experiencing a recession could be a source of profit for Indonesia.

Furthermore, Aviliani said, when compared to other countries, Indonesia has the potential for better economic recovery after the COVID-19 pandemic.

According to Aviliani, even if Indonesia experiences contractions for six consecutive months and enters the brink of recession, the world will judge the recession that hit Indonesia as a result of a lack of government budget spending.

Not only that, according to Aviliani, if Indonesia manages to avoid the recession sequence, the rupiah has the potential to become one of the strongest currencies along with the influx of foreign investment.

"We hope that in the third quarter it will not be negative, if it is positive, it will be much better for funds from South Korea and other recession countries to enter, the rupiah must also be prepared to continue to strengthen with investment," he said.

For your information, South Korea officially entered the abyss of recession in the second quarter of 2020. This is the first time since the last 17 years that the recession has hit the ginseng country.

The cause of the recession was none other than the impact of the COVID-19 pandemic, which resulted in the deepest decline in exports for two decades.

The drop in South Korean exports is due to local government policies that implement social restrictions to prevent the spread of COVID-19. The South Korean government's decision resulted in paralyzing factory performance.

The Bank of Korea announced that South Korea's Gross Domestic Product (GDP) plunged 3.3 percent in the second quarter or April-June period compared to the previous quarter which contracted 1.3 percent. The decline in economic growth in that quarter was even the worst after the recession that occurred in 1998.