INDEF: Don't Expect The Economic Growth In The 4th Quarter To Be Positive

Illustrated. (Irfan Meidianto / VOI)

JAKARTA - Indonesia's economic growth in the third quarter of 2020 is projected to contract deeper than previously estimated by the government. Initially it was predicted that it could still be in the positive zone of 0.2 percent. However, this prediction was revised again per September to minus 2.9 percent to minus 1.0 percent.

Institute for Development of Economics and Finance (INDEF) senior researcher Enny Sri Hartati said that economic growth is faced with a contractionary situation amid the COVID-19 pandemic is normal, because it occurs in all countries. Enny said that economic growth in the fourth quarter of 2020 is still potentially minus.

Furthermore, Enny said, the contraction of the economy in the fourth quarter was caused by problems in which the handling of the COVID-19 pandemic was still hampered in terms of fiscal effectiveness.

For example, social protection programs have not been effectively implemented until now. There is still a problem of overlapping data, including data on how many people who have received social assistance are not recorded, so the effectiveness of this program cannot be measured.

"Why have we been criticizing the effectiveness of the social protection budget all this time? Precisely because it is effective it does not necessarily stop the economic contraction, let alone talk ineffectively," he said in a virtual discussion, Tuesday, September 22.

Meanwhile, he considered, monetary policy was quite swift in responding to the dynamics. Enny said, this should also be followed by the fiscal side.

"Economic contraction is a normal thing in all countries. What is different in Indonesia is the policy response. Our problem is not monetary, the problem facing this pandemic that is still being hampered is fiscal effectiveness," he said.

According to Enny, as long as there are improvements on the fiscal side, both effectiveness through stimulus, intervention, and incentives, then improvements in the fourth quarter of 2020 will be very possible.

"As long as the contraction in the third quarter of 2020 was not as deep as the second quarter of 2020, which was recorded at minus 5.32 percent, it is still okay. This means that there was an economic improvement during that period," he said.

However, said Enny, the problem is if the third quarter of 2020 is deeper than minus 5.32 percent. This means that there is no improvement and recovery in the fourth quarter will be difficult.

"Unfortunately again, throwing towels blaming each other looking for scapegoats is because of the PSBB. Even though the PSBB (volume II) has only been (enforced) for 2 weeks," he said.