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The World Bank is pessimistic, Indonesia’s economic growth is predicted to be minus 2% in 2020

ILLUSTRATION. Indonesia’s economic growth in 2020 is predicted by the World Bank to contract by 2%

Reporter: Yusuf Imam Santoso | Editor: Anna Suci Perwitasari

KONTAN.CO.ID – JAKARTA. The World Bank predicts Indonesia’s economic growth throughout 2020 could contract between 1.6% and 2% on an annual basis yoy. This projection is worse than the consensus issued last June, which is 0%.

The World Bank argued that Indonesia’s economic contraction occurred because the handling of the pandemic in terms of health was not optimal.

Chief Economist for East Asia and Pasific World Bank Aaditya Mattoo explained that the Indonesian government had not succeeded in overcoming the corona virus pandemic. According to him, Indonesia is one of the countries in the Asia Pacific region that has yet to show signs of economic recovery in the near future.

Mattoo even said that the large-scale social restrictions (PSBB) policy implemented by the local government was less effective. So that it makes it worse outlook Indonesia’s economic recovery.

Also Read: Deputy Minister of Finance Suahasil: The economy in the third quarter of 2020 will improve

Indonesia has not implemented strict isolation, and seems to rely more on lighter policies,” Matto said in an online press conference, Tuesday (29/9).

As a result, the World Bank predicts Indonesia’s economic recovery will be slower than other countries in the Asia Pacific region. Mattoo added that economies in Asia Pacific countries such as the Philippines have started to run, despite sentiment pressures demand global still haunts throughout the year.

He further said that to maintain Indonesia’s economy this year, the government needs to carry out fiscal reforms, by increasing spending. Primarily, it is used as a stimulus for social protection.

In a pandemic situation like this, social protection has a real impact on the domestic economy. Thus, mitigating the direct impact of the crisis and helping workers affected by the pandemic, especially to the poor and middle class.

The World Bank predicts that the economies of countries in the Asia Pacific region will contract by an average of 0.9% to 3.5% by the end of this year. “Countries in the East Asia and Pacific region need to strengthen reforms in the field of trade, especially the service sector which is still being protected, the financial, transportation and communication sectors,” said Mattoo.

Previously, Minister of Finance (Menkeu) Sri Mulyani Indrawati said that the government’s projection of economic growth throughout 2020 would be minus 0.6% yoy and could even contract up to 1.7% yoy.

Also Read: The explanation from the Governor of BI regarding the continuation of burden sharing

The government’s projection at the end of this year is in line with several international institutions predicting Indonesia’s economy to be in a negative zone, including The Organization for Economic Co-operation and Development (OECD) -3.3%, Asian Development Bank (ADB) -1%, Bloomberg -1%, International Monetary Fund (IMF) contracted 0.3%.

Negative teritory will occur in the third quarter and may still take place in the fourth quarter which we are trying to keep close to 0% at a positive level. All these forecasts are how the development of the Covid-19 case will affect economic growth, ”said Sri Mulyani at the Pesr APBN Conference, Tuesday (22/9).

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Reporter: Yusuf Imam Santoso
Editor: Anna Suci Perwitasari

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