Singapore's Recession is Getting Worse, This Is a Series of Impacts on Indonesia

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JAKARTA - Singapore's economic condition is getting worse due to the COVID-19 pandemic.  The Singapore economy contracted by 42.9 percent on a quarter to quarter (QtQ) basis, in the second quarter of 2020.

Annually, Singapore's economy is minus 13.2 percent. This figure is worse than the government's projection, which is minus 12.6 percent (year-on-year/YoY).

So what is the impact on Indonesia? Executive Director, Indef Tauhid Ahmad, said Singapore's recession has an impact on Indonesia. Even though it's not too big. One of those affected is the domestic trade sector.

"From the trade side, Singapore's position towards us is one of the contributors to our import and export destination countries. If I'm not mistaken it is in the top five, both for exports and imports. Singapore is in a recession, so its domestic demand will decline. Exports of our products will automatically decline," he said when contacted by VOI, Wednesday, August 12.

Globally, Indonesia's exports and imports also weaken about 11 percent or 12 percent in the period January to May.

Second, from the investment side. Singapore is one of the largest investors in Indonesia. He said, although the condition is still relatively good, it is estimated that there will be a potential decline. This is because, in a crisis situation like this, Singaporean investors will definitely try to build their country first.

"Third, from the financial side. Even Singapore has a financial center in Southeast Asia, so if Singapore is depressed, the economy goes down. The financial market will automatically decline. At least, the capital inflow to us is also a little disturbed," he explained.

Finally, in terms of tourist visits. Based on BPS data, tourist visits to Indonesia fell by 80 percent.  Singapore as one of the largest tourists in Indonesia, especially in the Riau Islands and Batam, will also depend on it. 

"Part of the industry is owned by Singaporeans. I think it will affect Indonesia if Singapore is in recession," he explained.

According to Tauhid, a greater impact would be felt by Indonesia if many of its trading partner countries also experienced a recession like Singapore.

"I think there will be a lot of influence if countries other than Singapore experience a recession. I think its trading partners such as America, Japan, South Korea, Malaysia also have an influence on us. So trading partner countries except China should be a (government) concern," he explained.

The impact or development in the second quarter made Indonesia's economy minus 5.32 percent.  Tauhid assessed that it took a lot of energy so that in the third and fourth quarters it could grow positively.

"We still believe in the third quarter, there will be negative growth. The recession is difficult to avoid. Maybe, so that it doesn't go too deep even though it will be negative, the government must accelerate the realization of existing programs. Especially PEN, for social assistance," he said.

The control of the COVID-19 pandemic also affects Indonesia's economic growth in quarter III and IV.  If the government fails to deal with COVID-19, the economic recovery will be even harder.