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Jakarta, CNN Indonesia –
Several countries have fallen into the trap recession the economy due to the pandemic COVID-19. Indonesia itself is expected to experience the same fate in the third quarter of 2020.
In fact, Finance Minister Sri Mulyani himself has confirmed that Indonesia will enter the brink of economic recession. He revised the projection for Indonesia’s economic growth this year from minus 0.2 percent to 1.1 percent to be deeper, that is, minus 0.6 percent to 1.7 percent.
“This means that the negative can happen in the third quarter and it will occur in the fourth quarter, that we are still trying to (growth) to be close to zero,” said Ani, his nickname, in the presentation of our State Budget, on Tuesday (9/22).
A country is said to experience an economic recession if its economic growth is negative in two consecutive quarters. In the second quarter of 2020, Indonesia’s economic growth was recorded at minus 5.32 percent.
Actually, what happens to a country when it goes into an economic recession?
Indonesian Center for Economic Reform (Core) economist Yusuf Rendy Manilet said that an economic recession has a domino effect on a country’s economy. First, Economic activity will not be as massive as non-recessive conditions. If economic activity slows, generally the demand for goods and services will also slow.
“Ultimately, many factories have to reduce their production processes,” he said. CNNIndonesia.com, Tuesday (22/9).
Second, The company will try to achieve operational efficiency, one of which is the termination of employment (PHK). The reason is that even though production is reduced, the company’s operating expenses, such as electricity or employee salaries, continue to function.
“That is why we see many layoffs that occur during a pandemic like now, with the recession this trend has the potential to continue,” he said.
Third, the wave of dismissals as a consequence of this series of events increased the number of unemployed. He predicts that the number of unemployed people will reach 15 million due to the pandemic.
Fourth, kWhen people’s incomes decline, eventually consumer activities will also be eroded. reduced. This is reflected in the real sales index (IPR), which still registered a 10.1 percent contraction in August.
Fifth, yesWhen the source of income has been reduced or exhausted, there are an additional number of poor people. Yusuf said that in the worst case, the number of poor people would be in the range of 30 million to 35 million people.
“Also, the number of vulnerable and near poor people in Indonesia is very large, economic shocks like a recession will drive them out of class to become poor people,” he said.
Likewise, an economist from the Institute for the Development of the Economy and Finance (Indef) Bhima Yudhistira Adhinegara also said that when there is an economic recession, the number of poor people will increase. In addition, the impact of the economic recession this time was experienced by all sectors from large companies to MSMEs.
“At the same time, the middle class is vulnerable to poverty, with up to 115 million people falling below the poverty line. The estimated poverty rate will increase from 12 to 16 percent,” he said.
[Gambas:Video CNN]Furthermore, people’s purchasing power has also declined amid the economic recession. In fact, these signs are reflected in the Consumer Confidence Index (IKK) for purchase and consumer credit. The central bank recorded the ICC position at 86.9 as of August 2020, or a confidence level of 100.
Additionally, there was a slowdown in consumer credit growth to 1.5 percent in July 2020, up from 7.3 percent in July 2019.
“The situation in the future, both IKK and consumer credit, is an indication that the movement of public spending will be less after it was announced that Indonesia was going into recession,” he said.
(ulf / sfr)
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