Bank Indonesia Brings Bad News, They Cut Economic Growth Target To 3.8 Percent Due To Emergency Community Activity Restrictions

Illustration (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) is starting to be realistic with an economic growth target throughout 2021 in line with the Implementation of Emergency Community Activity Restrictions (PPKM) due to the soaring daily cases of COVID-19.

BI Governor Perry Warjiyo even revealed that the predicted gross domestic product (GDP) was not within the range that has been the benchmark for the monetary authority.

“Initially, we stated earlier that Indonesia's GDP forecast this year could grow 4.1 percent to 5.1 percent with a midpoint of 4.6 percent. However, with the implementation of Emergency PPKM with the assumption of one month, it will decrease to around 3.8 percent", he said during a virtual meeting with the Indonesian House of Representatives (DPR RI) Budget Agency (Banggar), Monday, July 12.

According to Perry, the determination of the Emergency PPKM at this time has definitely narrowed the space for community mobility in productive activities. However, he still supports the social distancing agenda in order to suppress the pace of COVID-19, which is currently in a fairly high trend.

"We will continue to see how the impact of this Emergency PKMM on the decline in mobility and consumption will have an impact on economic growth", he said.

Previously, the government through the Minister of Finance (Menkeu) Sri Mulyani had also given a signal that the economic growth target in 2021 was not achieved.

In her explanation, the Minister of Finance said that in a tough scenario, economic growth is projected to only reach a maximum level of 3.7 percent this year. This assumption is based on if the Emergency PPKM status is extended until the third week of August.

"In this situation, the pace of the economy is relatively slower", she said in a webinar organized by Bisnis Indonesia, Wednesday, July 7.

It is important to note that the government has set this year's economic growth to be in the range of 4.5 percent to 5.3 percent. This target was made by the government at the beginning of the year before the COVID-19 spike in the first half of 2021.