Faisal Basri Asks Jokowi not to Force Himself to Avoid Recession

Jakarta, CNN Indonesia –

Senior Economist at the University of Indonesia Faisal Basri states the government should not force itself to avoid the economy inland from recession in the third quarter of 2020 later. Because, this can be dangerous for the economy in the long run.

He said the government should remain focused on controlling the corona virus pandemic compared to restoring the economy. Because, the impact will be worse for all sectors if the government prioritizes the economy rather than health.

“The government should not force itself to avoid recession by prioritizing the economic recovery agenda rather than controlling co-19 (corona virus),” Faisal said, quoted from his personal blog, Wednesday (5/8).

He said that if the government forced economic recovery first, the economic recession that would have been avoided would actually be longer than if the government focused on controlling the corona virus. The longer the recession, the more the government must pay.

“It is more realistic if the government tries to control the corona virus maximally so that the economy can grow positively again in the last quarter of this year, so that 2021 can go faster,” Faisal explained.

It is known, the Central Statistics Agency (BPS) has just announced that the Indonesian economy is minus 5.32 percent in the second quarter of 2020. The agency claims this is the first contraction since the first quarter of 1999.

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“Because growth in the first quarter of 2020 was only 2.97 percent, the cumulative growth until the first half of this year contracted by 1.26 percent,” Faisal said.

He revealed the two sectors hardest hit by the corona virus pandemic were transportation and warehousing, as well as accommodation and food and drink. Each sector recorded a contraction of 30.8 percent and 22 percent.

“However, because the contribution of these two sectors to the economy is relatively small at only 5.85 percent, the effect on the growth of gross domestic product (GDP) is not dominant. Large-scale social restrictions (PSBB) and the decline of foreign tourists really hit these two sectors,” said Faisal

Meanwhile, the industrial sector recorded minus 6.19 percent, trade minus 7.57 percent, construction minus 5.39 percent, mining minus 2.72 percent, government administration minus 3.22 percent, other services minus 12.6 percent, company services minus 12.09 percent, and electricity and gas procurement minus 5.46 percent.

Only a few sectors appear to have managed to survive in the positive zone. These sectors, such as agriculture, grew 2.19 percent, financial services grew 1.03 percent, education services grew 1.21 percent, real estate grew 2.3 percent, health services grew 3.71 percent, and water supply grew 4 , 56 percent.

From the expenditure side, all components appear to be minus in the second quarter of 2020. In details, household consumption is minus 5.51 percent, investments minus 8.61 percent, exports minus 11.66 percent, government consumption minus 6.9 percent, consumption of Non-Institutions Profit Serving Households (LNPRT) minus 7.76 percent, and imports minus 16.96 percent.

Meanwhile, Faisal predicts that Indonesia will enter a recession in the third quarter of 2020 because the spread of the corona virus has not yet ended. However, he sees the economic contraction in the third quarter of 2020 is not as deep as the second quarter of 2020.

“Two consecutive quarters (will) experience a contraction, so that Indonesia will enter a recession,” concluded Faisal.

(aud / agt)


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