Economist: Indonesia's Economic Policy Is Adaptive To Global Crisis Threat

Bank Permata economist Josua Pardede. (Photo: Doc. Antara)

JAKARTA - Bank Permata economist Josua Pardede estimates that the Indonesian economy will be able to survive amid the gloomy threat of the global economy.

Because, according to him, the Indonesian government has an adaptive monetary and fiscal policy.

"We are fiscally disciplined, where next year the deficit will return to 3 percent. Meanwhile, other countries are struggling with high debt levels. With relatively good debt management, with monetary policy that is not as aggressive as America. Additional economic posture is driven by household consumption. ," said Joshua, Thursday, October 13.

Joshua said household consumption contributed more than 50 percent of the total national GDP. Then the next crutch is exports.

"This means that when the world economy slows down, exports will slow down, but the fact is that the contribution of exports is not as large as consumption," said Joshua.

Therefore, Joshua said, the government's homework is to maintain public consumption.

"I think, as long as our consumption is maintained, the government prioritizes spending to support people's purchasing power, to support MSME actors who incidentally are the backbone of our own economy," said Joshua.

With the strength of the domestic economy and the right government policies, Joshua assesses that Indonesia is not expected to be too deep into a global recession.

Purchasing power

The same thing was said by a researcher from the Institute for Development of Economics and Finance (Indef) Nailul Huda.

Nailul predicts that Indonesia's economic condition will still be able to withstand the threat of a global recession.

This is because household consumption occupies a larger portion of the Indonesian economy.

This is what is able to help overcome the economic downturn caused by global factors.

"Our economy is still quite well maintained because more than 50 percent of our economy is supported by the domestic economy. So with high public demand, our economic growth is still in the range of 5 percent," he explained.

However, said Nailul, the domestic economy could boomerang for Indonesia if people's purchasing power declines. Because, it is not easy to restore people's purchasing power when it has already fallen.

Therefore, Nailul reminded the government to keep core inflation from soaring too high.

"However, if people's purchasing power is hit, it can take a long time to recover because the recovery in purchasing power is quite long compared to our exports and imports. So from the beginning it was stated that it was necessary to maintain people's purchasing power by maintaining inflation rates, especially core inflation," he said.

Nailul reminded the government to contain inflation as much as possible so as not to exceed 10 percent because the after-effects would be very dangerous for household consumption which supports the Indonesian economy.

"If inflation crazes to double-digit numbers, it can be dangerous for household consumption," he continued.

According to him, although the Indonesian economy is still in a safe stage, the government must prepare a precise strategy to control future inflation when global economic conditions worsen.

"So with the current inflation rate, the government still dares to say it's safe. Even though it's not really safe, it's related to inflation problems," he concluded.

Previously, Coordinating Minister for Economic Affairs Airlangga Hartarto said the Indonesian economy would be able to face the threat of the global economic crisis.

"Indonesia's external factors are still very strong. So Indonesia is not included in a country that is vulnerable to financial problems," said Coordinating Minister Airlangga.

However, the General Chair of the Golkar Party warned of the dangers of Perfect Storm, the 5C challenges, namely the unfinished COVID-19, the prolonged Ukrainian conflict, climate change, soaring commodity prices, and the cost of living impact of inflation.