Even Without COVID-19, Indonesia's Economic Growth Is Already Difficult To Reach 5 Percent

Center of Reform on Economics (CORE) Research Director Piter Abdullah. (Mery Handayani / VOI)

JAKARTA - The outbreak of the corona virus or COVID-19 in various countries including Indonesia has an impact on global economic growth. Bank Indonesia (BI) must also recalculate the projected economic growth this year. It is even predicted that Indonesia's economic growth will be lower in 2020.

Realizing that the global economic condition has begun to be affected by COVID-19, the Indonesian government has taken quick steps by issuing a policy in the form of a stimulus. However, will this stimulus have a positive impact on increasing Indonesia's economic growth?

Center of Reform on Economics (CORE) Research Director Piter Abdullah said, although the Indonesian government has issued the incentive stimulus, it is predicted that economic growth will not move from 5 percent.

In November 2019, said Piter, even without a trade war and COVID-19, his party predicts Indonesia's economic growth will be at 4.9 to 5.1 percent. Now with the COVID-19 outbreak, he emphasized that Indonesia's economic growth will not be able to creep up.

"Our estimate is still below 5 percent even though there are stimulus I and II. As long as the stimulus is still very limited, our economic growth is still below 5 percent. Now with the presence of the corona virus, it will definitely be below 5 percent," he said, at the time of writing. met at the CORE Office, Tebet, South Jakarta, Thursday, 12 March.

Moreover, said Piter, the response to this policy was still not measurable and it was not clear what kind of impact it would have. Because, he said, his nature was still holding back the slowdown. Meanwhile, in order to increase purchasing power, it is only just an easing of PPh 21, while the decline in purchasing power has been very large.

"Government policies that take care of purchasing power also still exist, such as the excise policy for cigarettes and plastics. Thank God BPJS is canceled by the Supreme Court, if that (BPJS is still rising), how much purchasing power has been eroded," he said.

As is well known, Bank Indonesia (BI) believes that the COVID-19 outbreak will have a V-shape impact on the domestic economy. This means that economic growth in the first quarter of 2020 is the lowest, but increases in the following quarter.

BI predicts Indonesia's economic growth in the first quarter of 2020 at 4.9 percent, 5 percent in the second quarter, 5.1 percent in the third quarter and 5.2 percent in the fourth quarter.

However, Piter said again, in the midst of difficult global conditions and the increasing number of countries affected by COVID-19, it is very difficult to expect a V-shape. This is because the slowdown in Indonesia's economic growth has been going on for five years.

"This condition is strengthened by a trade war, now it is being destroyed again with the corona virus. So in my opinion it is sloping. Now there is a consistent decline, which can cause a very deep decline, and it is very difficult to rise suddenly," he said.

Piter explained that what is currently a concern is that the pattern of COVID-19 is becoming uncertain. Initially V-shape followed the pattern of COVID-19, where it was thought that the outbreak could be resolved in a short time.

"But now the corona is not clear, it is slowing the healing process of the corona. In China it is getting better, so it slopes down later. But Italy, and Iran exploded, South Korea also exploded, this pattern is feared to emerge in other countries again. “Coronavirus globally becomes longer. If it goes long, the impact of the global economy will also be long. It means that the shape is no longer V, but possible U,” he explained.