Indonesia Is Still In A Recession, The Economy For The First Quarter Of 2021 Is Predicted To Be Negative

Illustrations (Photo: Irfan Meidianto / VOI)

JAKARTA - Indonesia became one of the countries whose economy was still in recession last year. Following this, the realization of economic growth was minus 2.07 percent throughout 2020.

The economy in the first quarter of 2021 is predicted to be in the negative zone. This means that Indonesia will still experience a recession. The government issued very optimistic projections for the national economy in the first quarter of 2021.

Coordinating Minister for Economic Affairs Airlangga Hartarto said the government is targeting Indonesia's economy to grow 4.5 to 5.5 percent this year. The first quarter projection is estimated at 1.6 percent to 2.1 percent.

Executive Director of the Institute for Development of Economics and Finance (Indef) Tauhid Ahmad said national economic growth in the first quarter of 2021 was in the range of minus 1 percent.

The prediction from the Institute for Development of Economics and Finance is inseparable from the situation of the high spread of COVID-19, the development of people's purchasing power, and inflation that is below 1.5 percent in January 2021.

Not only that, according to Tauhid, until now, several things have not shown any significant changes that occurred at the beginning of this year.

"This has not changed much, there are improvements but it is still slow", he said last week.

According to him, the implementation of the micro-scale Public Activity Restrictions (PPKM) policy also affects national economic growth. Of course, this will still have an impact on the economic sector.

So that the national economic growth in the first quarter of this year will still grow at a minus.

"So do not expect the current situation to grow positively. We estimate it is minus 1 percent, it cannot be positive yet", he explained.

Government's efforts to leverage positive growth

Various attempts have been made by the government to leverage positive economic growth this year. One of them is through the COVID-19 vaccination program which has started to be implemented with the main target being medical personnel.

Minister of Cooperatives and Small and Medium Enterprises (UKM), Teten Masduki said Indonesia's economic growth in 2020 is in an improving trend.

This is because, if viewed from a quarterly basis, the domestic economy continues to experience improvement. He hopes that this trend will continue in 2021, in line with the government's COVID-19 vaccination program.

The national economic growth in the second quarter of 2020 was recorded at minus 5.32 percent. Then it improved in the third quarter of 2020 which was recorded at minus 3.49 percent.

Repair is aimed at the fourth quarter of 2020 at minus 2.19 percent. Thus the overall domestic economy was recorded at minus 2.07 percent.

"The key is solving COVID-19. We need to succeed in the vaccination program because that is our game changer of the economy, we also have to implement health protocols. If we work together, we can overcome this COVID-19 faster", he said, during a football event with five alumni, Saturday, February 13.

Meanwhile, the Minister of Industry, Agus Gumiwang Kartasasmita, has participated in encouraging national economic recovery (PEN) this year through industry 4.0.

He said PEN can be achieved by running priority programs that are able to encourage economic activity, increase consumption, increase exports, and increase investment, with industry as the main driving force.

These priority programs include vocational education and training programs, research programs, and scientific and technological innovation which are supported through activities to accelerate the use of industrial transformation 4.0.

Then, optimizing the use of industrial technology, organizing forums for strengthening the capacity of green industry certification agencies programs for added value and industrial competitiveness, and implementing the road map for Making Indonesia 4.0.

Not only that, said Agus, management support through increasing the capacity of the State Civil Apparatus of the Ministry of Industry, data and information services for industry 4.0 are also expected to strengthen PEN and become a driving force in committing to achieve bureaucratic reform.

In addition, to maintain the trend of economic recovery towards positive growth, the government and Bank Indonesia agreed to keep inflation within the target range of 3 percent plus minus 1 percent by 2021, as a measure to maintain the momentum for economic recovery.

"Low and stable inflation is expected to support economic recovery as well as strong and sustainable economic growth towards Indonesia's development", Coordinating Minister (Menko) for the Economy Airlangga Hartarto, reported by setkab.go.id, Sunday, February 14.

According to Airlangga, the government and BI also agreed on a strategy to strengthen inflation control. Among other things, maintaining volatile food inflation in the range of 3 percent to 5 percent.

This effort is carried out by strengthening four strategic pillars which include affordability, availability of supply, smooth distribution, and effective communication (4K) during the COVID-19 pandemic.

The government, said Airlangga, also maintains the availability of supply and smooth distribution, especially in anticipation of rising demand ahead of Ramadan and Eid Al-Fitr in April and May 2021 as well as other National Religious Holidays (HBKN).

Other steps include strengthening the coordination of the Central and Regional Governments in controlling inflation, strengthening synergy between ministries/agencies (K/L), strengthening national food security by increasing production through the food estate program, and maintaining smooth distribution through optimization of infrastructure and efforts to deal with the impact of natural disasters.