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Indonesia Hardly Escapes Recession

Monday, 28 September 2020

Indonesia Hardly Escapes Recession

JAKARTA. Indonesia finds it hard to escape the threat of an economic recession, after in the first quarter the Gross Domestic Product (GDP) growth was corrected by 5.32% and in the third quarter the government predicts it will again grow between -1.7% to -0.6%.

As for the economy of a country can be declared in a state of recession if in two consecutive quarters experienced negative growth. Related to this condition, the Head of Fiscal Policy Agency (BKF) of the Ministry of Finance Febrio Kacaribu, assessed that Indonesia is currently entering a recession phase.

According to him, the signs of a recession began to be seen since the first quarter, not the second quarter. By then, national GDP growth had begun to slow down, from the prediction of being over 5%, while the realization was only 2.7%.  The condition then got worse in the second quarter due to the impact of the Corona Virus Disease 2019 (Covid-19) pandemic.

Read: Pandemic, Recession and The Fate of Tax This Year

However, the government sees that economic conditions in the third quarter show improvement.  This trend is expected to continue in the fourth quarter, so that cumulative economic growth in 2020 can be maintained.

Although it is difficult to avoid recession, the government claimed that indonesia's economic condition still much better than several ASEAN countries, such as India which corrected 24%, Thailand grew -12.2% or the Philippines grew -16.5%. 

Febrio added, based on the government's observation from 180 countries in the world, 92% of them are confirmed to experience negative growth in 2020 and will experience a crisis.  This means that similar conditions are not only experienced by Indonesia but it is a global trend.

The government expects the national economy to recover in 2021. They predicts the domestic economy will grow between 4.5%-5.5%.
 



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