Indonesia prepares to experience an economic recession, this has its impact on society

KOMPAS.com – Finance Minister Sri Mulyani Indrawati has revised the projection for economic growth in the third quarter of 2020.

He said that in the third quarter, the Indonesian economy is likely to experience a contraction from minus 2.9 percent to minus 1.1 percent.

Previously, in the second quarter, Indonesia’s economic growth had experienced minus 5.32 percent.

Meanwhile, year-end overall economic growth is estimated to be in the range of minus 1.7 percent to minus 0.6 percent.

According to Sri Mulyani, economic growth in the third and fourth quarters will also be negative. With this condition, the occurrence of an economic recession in Indonesia is not closed.

It should be noted that an economic recession is a condition in which there is a significant drop in economic activity that lasts for months, even years.

Also Read: Sri Mulyani’s Third Quarter Economic Projection of Minus 2.9 Percent, Prepare for a Recession

So what is the impact?

Impact of the recession

Price increase and inflation

Launching Kompas.comOn September 4, 2020, Gadjah Mada University (UGM) economic observer Fahmy Radhi said the recession would affect the supply o supply goods that fell drastically. However, the level of demand remains.

This condition causes prices to rise and can cause inflation.