The Impact Of The Revocation Of PPKM On The Indonesian Economy According To The Economist

Illustration of the Indonesian economy (Photo from Antara)

YOGYAKARTA - Since the Indonesian government officially abolished the imposition of restrictions on community activities (PPKM), many discussions about the impact of PPKM have been lifted on the economy. President Jokowi abolished the PPKM rules on December 30 last.

Previously, the government extended the latest PPKM to deal with the spread of COVID-19 from December 6, 2022 to January 9, 2023. The government also decided to revoke the PPKM contained in the Instruction of the Minister of Home Affairs number 50 and 51 of 2022.

Various economic observers expressed several views regarding the impact of the revocation of PPKM. There are economists who consider the implementation of this policy at the end of the year to be a positive signal for the Indonesian economy. However, some economists argue that the policy of revoking PPKM will not have much effect on economic growth in the country in 2023.

Here are some of the impacts of the revocation of PPKM on the economy, which are quoted from various sources:

The policy of revoking PPKM seems to show that the Indonesian economy is able to grow amid the issue of the threat of a global recession. Bhima Yudhistira, Director of Celios, said that Indonesia's projection could grow above 4.3 percent in 2023. This prediction is certainly better than the projected development of developing countries which is only 1.8 percent amid the threat of recession next year.

The elimination of PPKM is considered to be able to encourage economic recovery in Indonesia. People's economic activity is predicted to continue to increase, especially in shopping in the retail, wholesale trade, and retail trade sectors.

A number of business segments are expected to increase next year, including the tourism sector, restaurants, hotels, and cafes. These various sectors have indeed shown growth above 10 percent since the beginning of the third quarter of 2022.

However, some economists are of the view that this policy will not affect the economy too much in Indonesia in 2023. This is because mobility restrictions have indeed been strained since the last few months.

Mohammad Faisal, Executive Director of the Center of Reform on Economic (CORE), said that the implementation of PPKM or not actually did not make much difference. This is what is considered the revocation of PPKM does not really affect the economy.

Faisal also considered that this policy would not have much impact on the business of selling masks and hand sanitizers. He said the sales of the two goods had gradually declined in recent times. The elimination of PPKM is said to only continue the existing trends.

A similar response was also conveyed by the Director of the Setara Institute of Piter Abdullah. Piter said the impact of PPKM was not too much felt. In addition, Piter said the policy of revoking PPKM would still have an impact on accelerating economic recovery.

Meanwhile, Research Analyst Infovesta Kapital Advisori Arjun Ajwani believes that this policy will not significantly affect the performance of the Composite Stock Price Index (IHSG). Furthermore, he revealed that economic activity in Indonesia has improved since early 2022.

Executive Director of the Institute for Development of Economics and Finance (INDEF), Tauhid Ahmad, also conveyed the same response. According to him, this policy will not have a major impact on the Indonesian economy.

Tauhid Ahmad said that economic activities have adapted to digital systems since the pandemic. He said that since the beginning PPKM has implemented digitalization in various economic aspects until now.

Such is the assessment of various economists regarding the impact of the revocation of PPKM on the economy in Indonesia. This policy will have a fairly pronounced impact on a number of sectors, such as tourism, hospitality, restaurants, and cafes.

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