JAKARTA - In the second quarter, the Ministry of Finance estimates that economic growth will collapse in the range of minus 3.8 percent. Meanwhile, the Central Statistics Agency predicts a worse figure, namely 4.8 percent. However, is this a sign of an economic recession?
An economic recession can be defined as an economic downturn, in which a condition occurs when the gross domestic product (GDP) or real economic growth has decreased for two consecutive quarters.
Finance Minister Sri Mulyani explained that if Indonesia's economic growth in Kurtal III also contracted, it was certain that Indonesia would experience a recession. This is because the economic growth has been negative twice in succession.
However, Sri hopes that national economic growth in the third and fourth quarters can improve or be above 0 percent, so that a recession does not occur.
"Technically, we can get into a recession if the (economic growth) in the second and third quarters is minus. So we try the third quarter to be above 0 percent," he said, during a working meeting with Commission XI of the Indonesian Parliament, Monday, June 22.
Sri Mulyani explained that economic growth in the second quarter weakened due to the impact of implementing various policies such as large-scale social restrictions (PSBB) which affected supply and demand. However, he said, these conditions will improve in the third quarter by 1.4 percent because a number of regions have implemented a transitional PSBB.
Meanwhile, said Sri, the economic projection is minus 1.6 percent in the third quarter if the public does not consume significant consumption during the transition period. To support consumption, the government has executed a safety net for 29 percent of social assistance recipients.
"In total we cover 45 percent of the total people with the lowest income when calculated by social assistance in Jabodetabek," he said.
Sri Mulyani hopes that this social assistance can affect consumption at the level of the group with the lowest income. So, it is expected that economic growth in the third quarter will be in the range of 1.4 percent with a negative zone to minus 1.6 percent.
As for the fourth quarter, Sri Mulyani estimates that Indonesia's economic growth will be above 3 percent. "For the fourth quarter, it is in line with relaxation and various UMKM programs that have started running," he explained.
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