Ministry Of Finance: Waiting For The Release Of Economic Growth Tomorrow, Indonesia Is Getting Closer To A Recession

Illustrated. (Irfan Meidianto / VOI)

JAKARTA - The Ministry of Finance projects that Indonesia's economic growth in the third quarter will still contract, as happened in the previous quarter due to the COVID-19 pandemic. If that happens, then Indonesia will officially enter the brink of recession, following other countries.

However, officially the Central Statistics Agency (BPS) will announce new economic growth for the third quarter of 2020 on Thursday, November 5, tomorrow.

Head of the Fiscal Policy Agency at the Ministry of Finance, Febrio Kacaribu, said that a number of components that contribute to Gross Domestic Product (GDP) are predicted to contract. According to him, only government consumption has grown positively.

"Based on our estimates, for the third quarter, almost all components of GDP will still be negative," he said at the 2020 National Symposium on State Finance (SNKN), Wednesday, November 4.

Febrio said that the role of government spending is very central in current conditions, unlike the others. So that government spending will be the only component that will grow in the third quarter of 2020 and become a recession barrier.

The Ministry of Finance estimates that government consumption is predicted to grow between 9.8 and 18.8 percent in the third quarter of 2020. Meanwhile, household consumption, investment, as well as exports and imports are estimated to still experience negative growth.

"This is referred to as state spending as a countercyclical instrument that can encourage the economic recovery process," he said.

As is known, in the third quarter of 2020, the Ministry of Finance projects economic growth of between minus 2.9 percent to minus one percent. Meanwhile for the whole of this year, the economy is estimated to be between minus 1.7 percent to minus 0.6 percent.