Indonesia has officially entered a recession after the Central Statistics Agency (BPS) reported negative GDP growth of -3.49% for the most recent quarter.
This contraction of GDP for two consecutive quarters has made Indonesia officially declare recessionary status for the first time since 1999. Sri Mulyani Indrawati, the Minister of Finance, has noted that she believes the Indonesian economy has passed the lowest point.
“We’ve passed the worst position of the economy due to COVID-19. Recovery efforts will continue to be accelerated and will continue to be pushed into the positive zone in the fourth quarter of 2020 and 2021,” he said.
Sri Mulyani described various improvements that have been seen in the third quarter of 2020 that would mean future recovery for Indonesia’s economy. Only last week, President Joko Widodo claimed that Indonesia’s economy has been better in comparison to other countries.
Bhima Yudhistria, an economist at The Institute for Development of Economics and Finance, said that the worst impact of the recession has been the mass layoffs it has caused.
Bhima explained that Indonesia has experienced three waves of layoffs this year alone. The first wave occurred during the first PSBB where tourism, hotels, and restaurant were affected. Then, in June-July, the manufacturing and retail sectors were impacted.
The third wave of layoffs has been distributed evenly across all sectors of the economy.
According to Bhima, there has also been an increase in unemployment and poverty rates. People who are vulnerable have had little cash supply. Furthermore, the new workforce is increasingly difficult to compete in as job vacancies have decreased.
“The rich can survive because they have sufficient assets. Meanwhile, not all the middle class who are vulnerable to poverty can manage as their income decreases,” he said.
Bhima is encouraging government aid distribution to be accelerated immediately. He has suggested stimuli and subsidies be provided as soon as possible.
Source: CNBC Indonesia