JAKARTA - University of Indonesia Senior Economist Faisal Basri predicts Indonesia's economic growth in the third quarter will contract by minus 3 percent due to the COVID-19 pandemic. If this happens, it means that 100 percent of Indonesia will enter the abyss of recession because in the second quarter the national economy was already minus 5.32 percent.
Faisal assessed that the current government lacks understanding of the recession. Even according to him, a classmate of the Minister of the Economy, Airlangga Hartarto, as the economic commander in the country, did not understand this.
"In the third quarter, my estimate is minus 3 percent. Airlangga wrote the understanding of a large zero recession. The Coordinating Minister said that the second quarter was minus 5.32 percent, the third quarter was minus 3, because the minus was down. Are you horrified sir? "he said, during a joint hearing with Commission VI, at the DPR Building, Jakarta, Monday, August 31.
A recession occurs when the Gross Domestic Product (GDP) falls over a certain period of time, it could be several months, or it could be several years. But generally, said Faisal, if two consecutive minus quarters of economic growth is called a recession.
The INDEF economist said that the depth of contraction in third quarter economic growth was due to a number of factors. For one thing, improvements in economic indicators have not been fast enough or have been able to offset the decline that has already occurred.
Furthermore, he gave an example, recently car sales had indeed increased by 300 percent, but the growth from January to July 2020 was still minus 50 percent. Tourism, still contracting 80 percent from 2019.
In addition to slow recovery, he continued, people have a tendency to withhold consumption even though this component holds a share of 57.85 percent of GDP. If the consumption factor that holds the largest portion is not optimal, then growth is practically difficult to promote.
Faisal said consumption was stifled because people still felt there was great uncertainty about how to spend their money.
Even so, Faisal asked the government not to focus on avoiding an economic recession. Because, according to him, almost all countries one by one entered the abyss of recession.
Instead of avoiding, according to him, the government should focus on handling COVID-19 and the National Economic Recovery (PEN) program for a number of affected sectors.
"Don't focus on avoiding a recession," he said.
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