President Director Of BRI Sunarso: Indonesia's Recession Probabilities Are Only 2 Percent

President Director (Managing Director) of PT Bank Rakyat Indonesia Tbk (BRI) Sunarso. (Photo: Doc. Antara)

JAKARTA - President Director (Managing Director) of PT Bank Rakyat Indonesia Tbk (BRI) Sunarso said the probability of a recession in Indonesia was only two percent in 2023, based on analysis using the Markov Switching Dynamic Model (MSDM) approach assuming the United States experienced a recession.

"We made our own analysis, using MSDM, thank God our potential recession is only two percent, hopefully it really doesn't happen," Sunarso said in a Hearing Meeting (RDP) with Commission VI of the DPR, in Jakarta, quoted from Tuesday, March 28.

According to Sunarso, the MSDM approach was used because it had proven accurate in predicting several crisis events such as the Asian financial crisis in 1998 and the crisis caused by the COVID-19 pandemic in 2020.

Furthermore, Sunarso emphasized that two things that make the Indonesian economy have a high durability to the global recession are the strong domestic consumption in supporting economic growth, and optimism from micro, small and medium enterprises (MSMEs), which are the majority forming the Indonesian economy.

Household consumption, said Sunarso, supports Indonesia's gross domestic revenue (GDP) growth with a contribution of 51.87 percent. Therefore, he said, household consumption must continue to be strengthened to maintain economic growth.

He said that the government's policy of continuing social assistance and energy subsidy assistance to the community was the right way to strengthen household consumption.

"We need to direct various efforts to strengthen people's purchasing power, increase domestic products, so that they can really create jobs and support growth," he said.

In addition, based on BRI Micro and SME Index which measures the sentiment and business activities of MSMEs, in the fourth quarter of 2022 there was an increase in turnover, as well as the use of labor, which was the index 105.9 from 103.2 in the third quarter of 2022.

According to BRI Micro and SME Index, the expectations of MSME actors will also increase in the next 3 months based on calculations in the fourth quarter of 2022, which is 130.1 compared to 126.5 in the third quarter of 2022.

Other indexes related to the confidence of MSME players in the government also increased in the fourth quarter of 2022 to 138.3 from 127.2 in the third quarter of 2022.

"MSME actors provide an improved assessment of the government's ability to carry out its main duties, including due to improving economic performance," said Sunarso.