Ministry Of Finance: As Soon As COVID-19 Entered Last March, We Predict That Indonesia's Economy Will Decline

Ministry of Finance Building. (Angga Nugraha / VOI)

JAKARTA - The Ministry of Finance revealed that the government had actually predicted that Indonesia's economic conditions would be negative since the first positive cases of COVID-19 were found in the country.

Minister of Finance (Wamenkeu) Suahasil Nazara said, since early March positive cases of COVID-19 were found, the government has believed that the economy will definitely be affected and under pressure.

"When we imagine that this economy will be under pressure or negative economically, our economic calculations have imagined this will happen since last March," he said, during a virtual National Seminar on APIP-SPI-APH Supervision Synergy, Tuesday. , 29 September.

In fact, said Suahasil, long before the COVID-19 pandemic entered and spread rapidly in the country, the government also believed that Indonesia's economy would be affected when the virus hit China and Europe.

"Since February, when we saw this case, it has severely suppressed the economy in China and also in several European countries such as Italy, at that time in March we estimated that Indonesia was also affected and indeed we have been affected, namely today," he said.

Since then, he said, the Ministry of Finance has begun formulating policies to prepare the state budget to become the backbone for the Indonesian economy as a whole. This is because the state budget will definitely be affected and it is certain that state revenues will decline. Economic activity has also slowed due to the pandemic.

"In a situation like COVID-19 it is impossible to reduce spending, spending instead becomes the backbone of the State Budget and Regional Budget. Therefore, we must ensure that spending is sufficient and useful to handle the economy," he said.

As is known, in the first quarter the Indonesian economy could still grow positively. However, the impact of the pandemic on the national economy contracted greatly by minus 5.32 percent. Some economists predict that the economy will still be negative until the end of this year.

"Indonesia in the second quarter yesterday experienced minus 5 percent. This is the impact of COVID-19 and we hope that in the third quarter, it means that July-August-September we experience improvement. Even though it is still in the negative zone, this small negative zone is a we hope together, "he said.

Previously, the government was still optimistic that Indonesia's economic growth in the third quarter would be in the range of minus 1.1 percent to positive 0.2 percent. However, this prediction was revised again per September to minus 2.9 percent to minus 1.0 percent.

Finance Minister Sri Mulyani said that the development of the COVID-19 case affected economic activity and projections for Indonesia's economic growth.

"The Ministry of Finance, which previously saw the economy in the third quarter of minus 1.1 percent to positive 0.2 percent, and the latest as of September 2020 is minus 2.9 percent to minus 1.0 percent. This means that negative territory occurred in the third quarter and is likely still takes place in the fourth quarter which we are trying to get close to zero or positive, "he said, at a press conference for our State Budget, Tuesday, September 22.

In economics, a country can be called 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.