Sri Mulyani: Because Of Jakarta's PSBB, The Third Quarter Contraction Could Be More Than 2.1 Percent

Minister of Finance, Sri Mulyani. (Photo: Setkab)

JAKARTA - Finance Minister Sri Mulyani Indrawati said that the economic contraction in the third quarter of 2020 is predicted not to be as deep as the second quarter. However, it could be deeper than minus 2.1 percent due to the imposition of total large-scale social restrictions (PSBB) in DKI Jakarta.

As is known, the government projects that national economic growth in the third quarter of this year will stagnate at 0 percent (year on year / yoy) or contract the deepest by minus 2.1 percent on an annual basis.

"There is a scale that may decrease. We anticipate our estimate for 2020, in the third quarter, as I have told the DPR several times between minus 2.1 to 0 percent. If it arrived (like) last March, the PSBB could drastically decrease to the lower end of minus 2.1. So it is lower than 2.1 percent, "he said in a video conference with journalists, Tuesday, September 15.

However, Sri Mulyani assessed that the PSBB this time was not as bad as the previous one implemented in March. According to him, a number of office activities are still running, although with a limited capacity of 25 percent for Work From Office (WFO).

Furthermore, Sri Mulyani was reluctant to mention an estimate for the third quarter after the Jakarta PSBB took place in the last two weeks of September. However, he stressed, he would use the available time to anticipate the decline.

"For the latest estimate, we will still carry out an assessment of human movement data in the next two weeks. We hope that the activity will not drop too deeply," he explained.

Sri Mulyani said that DKI Jakarta Province has a big role in the stretching of the national economy, given its contribution to gross domestic product (GDP) which reached 17.7 percent. Therefore, he hopes that the contraction of DKI Jakarta's PDRB in the second quarter of contraction to minus 8.2 percent (yoy) will not continue in the third quarter of 2020.

"The contraction in the third quarter of 2020, we hope will be smaller than last quarter," he said.

The Ministry of Finance is also optimistic that economic growth in the fourth quarter of this year will be able to grow positively in the range of 0.4 percent to 3.1 percent. However, Sri Mulyani said, this prediction would depend on the ability of the central and local governments to deal with the pandemic.

"All projections depend on our ability to prevent an increase in the number of COVID-19 cases. I hope that the 8 priority provinces can continue to control cases so that they will gradually recover in the fourth quarter of 2020," he said.