Emergency PPKM For 6 Weeks Makes Indonesia's Economy Far From Target Sri Mulyani, Economist: Minus 0.5 Percent At The End Of 2021

Minister of Finance Sri Mulyani Indrawati. (Photo: Doc. Ministry of Finance)

JAKARTA - The government is reported to have made a scenario for the implementation of the Emergency Community Activity Restriction (PPKM) for up to 6 weeks. This activity restriction aims to reduce community mobility in order to break the chain of the spread of COVID-19 in the country.

Then, what will happen to the Indonesian economy if the Emergency PPKM is extended? Director of the Center of Economic and Law Studies (Celios) Bhima Yudhistira considered that if the government extended the Emergency PPKM, the impact would be very large for the economy. In fact, Indonesia's economic growth is expected to contract again.

"The economy could go back down to minus 0.5 percent in 2021," he said when contacted by VOI, Tuesday, July 13.

As is known, the government in this case the Minister of Finance Sri Mulyani together with Bank Indonesia is targeting the national economy to grow in the range of 3.7 percent to 4.5 percent throughout 2021. This projection is down from the original which was in the range of 4.3 percent to 5 percent. ,3 percent.

Meanwhile, Bank Indonesia again lowered the projected figure for Indonesia's economic growth this year in line with the implementation of the Emergency PPKM in this July period. The economy this year is expected to grow by around 3.8 percent, lower than the previous BI projection in the range of 4.1 to 5.1 percent with a midpoint of 4.6 percent.

Bhima assessed that the projections of the government and Bank Indonesia were tied to national economic growth in 2021 very much depended on the last two quarters of this year.

"The third and fourth quarters are very decisive (whether the government's target can be achieved or not)," he said.

The government remains optimistic that the second quarter of the economy will grow 7 percent

Minister of Finance (Menkeu) Sri Mulyani Indrawati predicts the economy in the second quarter of 2021 will be able to grow by around 7.1 percent to 8.3 percent as the economic recovery is increasingly visible in terms of production and demand.

"Our projection for the second quarter is in the range between 7.1 percent to 8.3 percent," said Minister of Finance Sri Mulyani at a working meeting with Commission XI of the Indonesian House of Representatives in Jakarta, quoted from Antara, Tuesday, May 25.

Sri Mulyani detailed that household consumption growth will recover to 6 percent to 6.8 percent in the second quarter of 2021 due to the momentum of the holiday and the sustainability of the PEN program implementation.

However, Sri Mulyani recently revised the economic growth target in the second quarter of this year. The government predicts that the national economic growth in the second quarter will not reach 8 percent. He said the decline in predictions was due to an increase in COVID-19 cases until the government finally decided to implement the Emergency PPKM policy.

"In the second half of June, we saw that there were indeed signs of the community starting to go down because of the psychological and objective impacts, namely the increase in the number of COVID-19 and the government carried out emergency PPKM. This caused the 8 percent figure to be unrealistic because of the correction," he said in a statement. CNBC Indonesia's Squawk Box event, Monday, July 12.

However, the State Treasurer is still optimistic that economic growth in the second quarter of 2021 can still reach 7 percent. This is because before the Emergency PPKM in April and May a very strong recovery began.

"However, we are aware that the risk is starting to rise and this means that it will affect mainly on the consumption side," he said.