JAKARTA, KOMPAS.com – The global economy is weakening due to the Covid-19 pandemic. Most developed and developing countries have the potential to experience recession in its economy, Indonesia is no exception.
Bank Permata economist Josua Pardede said, Indonesian economy already showed weakness.
This is reflected in the economic growth in the first quarter of 2020 of 2.97 percent, up from the same period last year which was 5.05 percent.
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“This indicates that the productivity of the economy both in terms of demand and production has decreased,” he told Kompas.com, Monday (7/20/2020).
The decline in national economic activity had a direct impact on layoffs (PHK) carried out by most business sectors. Including the informal economy as a result of PSBB policies in various regions in Indonesia.
Layoffs in the formal sector by the company, together with informal workers which sharply decreased productivity, ultimately led to a decline in community income which in turn had an impact on reducing household consumption expenditure.
“Most of the informal workers are also affected by the decrease in consumption expenditure, and even downgrading from previously middle-income people to be vulnerable to poor people, even down to pre-prosperous society,” he explained.
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Therefore, a significant slowdown in the domestic economy has given Indonesia the potential to experience a recession when economic growth for two consecutive quarters was negative.
The government itself estimates that economic growth in the second quarter of 2020 will contract in the range of minus 3.5 percent to minus 5.1 percent, with the midpoint at minus 4.3 percent.
In the third quarter of 2020 it is expected that the Indonesian economy will improve, although it still has the potential to grow negatively, which is in the range of minus 1 percent to 1.2 percent positive.
“( Recession) is expected to have a real impact on society in terms of reducing public consumption expenditure, thus encouraging the potential increase in the population vulnerable to poverty and poverty, “he said.
Similarly, Director of Research at the Center for Reform on Economics (CORE) Economist Piter Abdullah said, the domestic economy was experiencing a contraction and this has been seen since the second quarter-2020 and is expected to continue into the third quarter-2020.
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Impact, now a lot happens PHK thus increasing the number of unemployed and poverty. Piter said, these consequences could not be prevented while the plague was still ongoing.
“What can be done is to reduce its social impact by channeling social assistance,” he said.
According to him, the government could only keep economic contractions from getting deeper, this was done by providing stimulus to the business community and social assistance for the community through the National Economic Recovery (PEN) program.
“Also through easing PSBB (so that the economy moves again),” he said.
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