JAKARTA - The government is optimistic that Indonesia's economic growth in the third quarter will be in the range of minus 1.1 percent to positive 0.2 percent. However, this prediction was revised again per September to minus 2.9 percent to minus 1.0 percent.
Finance Minister Sri Mulyani said that the development of the COVID-19 case affected economic activity and projections for Indonesia's economic growth.
"The latest as of September 2020 is minus 2.9 percent to minus 1.0 percent. This means that negative territory occurs in the third quarter and is likely to continue in the fourth quarter, which we are trying to get close to zero or positive," he said at our APBN press conference, Tuesday, September 22.
In economics, a country can be said to be experiencing a recession if its economy is negative for two consecutive quarters. The determinant whether Indonesia will enter or not be in the brink of recession is in the third quarter of this year. If Sri Mulyani's prediction happens, then Indonesia will officially have a recession following Singapore, Japan and the United States.
Sri explained, from the demand side, in the third quarter of 2020, household consumption is still predicted to be in the contraction zone, namely minus 3 percent to minus 1.5 percent, with the total outlook for 2020 Indonesian consumption means that in the contraction range of minus 2.1 percent to minus 1 percent.
"For government consumption in the third quarter due to the extraordinary acceleration in spending, it experienced a very high positive up to 17 percent. The whole year 0.6 percent to 4.8 percent for government consumption, so the government has gone all out through a spending policy or expenditure expansion for countercyclicals," Meanwhile, investment is still in a quite heavy position at minus 8.5 to minus 6.6 percent and overall in 2020 investment is still predicted to be minus 5.6 percent to minus 4.4 percent.
"Our exports were more sloping. Overall the third quarter was still minus 13.9 percent. Imports were still very deep contraction and for the whole year our imports were deeper than exports," he said. Sri said the balance of payments and trade balance were still surplus but due to import contraction. hasn't shown a recovery yet. This means that it is still very fragile. "The entire year is minus 1.7 to minus 0.6 percent. The biggest negative contribution is investment, consumption and exports," he explained.
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