Sri Mulyani Pessimistic Fourth Quarter Economic Growth Positive: Household Consumption Still Depressed

Minister of Finance, Sri Mulyani. (Photo: Instagram @smindrawati)

JAKARTA - Finance Minister Sri Mulyani Indrawati predicts that economic growth in the fourth quarter of 2020 will still be in the negative zone, namely minus 0.9 percent to 2.9 percent. Despite improving from the third quarter of this year, Indonesia's economic growth is still contracting.

In fact, Sri Mulyani previously predicted that economic growth in the fourth quarter would be close to 0 percent.

"The overall outlook for the fourth quarter is minus 2.9 percent to minus 0.9 percent and the overall outlook for 2020 is minus 1.7 to minus 2.2 percent," he explained, at a virtual press conference of the KiTa State Budget, Monday, 21. December.

The state treasurer said that the projection occurred because public consumption or household consumption would still be depressed at the end of this year. He estimates that household consumption in the fourth quarter will be in the range of minus 3.6 percent to minus 2.6 percent. Meanwhile, government consumption grew by 3.1 percent to 5.1 percent.

"Because COVID-19 increased rapidly in December and steps to carry out social restrictions have begun to be tightened, so that consumption cannot normalize sooner than previously predicted," he said.

Meanwhile, investment growth is predicted to be minus 4 percent to minus 4.3 percent, and exports are predicted to be minus 0.6 percent to minus 2.6 percent.

Regarding imports, it still contracted in the third quarter. Meanwhile, in the last quarter of 2020 it has shown improvement. Imports are predicted to be minus 15.5 percent to minus 18.3 percent in the last quarter of this year.

Sri Mulyani said, the State Budget (APBN) was a countercyclical during this pandemic because it grew to 20 percent. On the other hand, government social assistance spending also experienced a growth of up to 80 percent.

"We see that this cannot lift the whole because aggregate demand factors such as consumption, investment and exports still have not shown a very strong recovery even though there has been a reversal," he said.