Sri Mulyani: Economic Recovery Is Driven By Public Trust For Normal Activities

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

JAKARTA - Finance Minister Sri Mulyani Indrawati estimates that Indonesia's economic growth will remain in the negative zone throughout 2020. Meanwhile, in the second quarter of 2020, Indonesia's economic growth contracted or minus 5.3 percent.

"Our projection is minus 1.1 to 0.2 percent. The third quarter may still experience negative growth and the fourth quarter may still be slightly below neutral," he said at a joint meeting with Commission XI of the House of Representatives (DPR), Wednesday, September 2.

In economics, a country can be said to be experiencing a recession if its economy is negative for two consecutive quarters. The determinant whether Indonesia will enter or not be in the brink of recession is in the third quarter of this year. If Sri Mulyani's prediction happens, then Indonesia will officially have a recession following Singapore, Japan and the United States.

Sri Mulyani conveyed that economic growth in 2021 will be in the range of 4.5 percent to 5.5 percent. According to him, with a deep enough contraction in the second quarter, in the first semester of 2021, the recovery process will not occur in full. This is because the influence of the COVID-19 pandemic will not completely disappear.

"The economic recovery is in the range of 4.5 percent to 5.5 percent, as conveyed for the first semester, although there has been a deep contraction in the second quarter, the recovery will not occur with strong or full power," he explained.

The state treasurer said, in 2021, COVID-19 is still very influential and has become one of the factors holding back the pace of economic growth, starting from the recovery of consumption, investment and global economic recovery.

Even so, Sri Mulyani hopes that a new rebound will emerge in the second semester of 2021. One of the driving forces for economic recovery in the second semester is the discovery and distribution of vaccines, as well as the return of public confidence to carry out normal activities.

"We depend on the recovery in the second semester of 2021. All predictions regarding vaccines were found to be widely vaccinated in the second semester," he said.

In the same opinion, the Governor of Bank Indonesia Perry Warjiyo said that overall for 2021 his party views the range of government assumptions for economic growth in the drafting of the 2021 national income and expenditure budget (RAPBN) of around 4.8 to 5.8 percent.

"What was conveyed by the Minister of Finance about 4.5 to 5.5 percent was quite realistic and also in line with our estimates at Bank Indonesia for 2021 we estimate the range is 4.8 percent to 5.8 percent," Perry said.