Jakarta, CNBC Indonesia – Corona alias alias Covid-19 has made the world economy helpless. Contractions are getting worse, even according to the World Bank, the worst since World War II.
Economic activity among developed countries drastically shrank by 7% in 2020. Emerging economic markets also shrank by 2.5%. This is the first time the economy of a developing country has contracted since 60 years ago.
The donor agency even projects that per capita income will decline by 3.6% which will bring millions of people into extreme poverty.
The blow hit hardest in countries where the pandemic is the most severe and where there is a large dependency on global trade, tourism, commodity exports and external financing.
Indonesia is included if you see that. While the magnitude of the disturbance will vary from one region to another.
Not to mention disruptions in schools and access to primary health services tend to have a long-term impact on human resource development.
“This is a very insightful view, with a crisis that tends to leave long-term scars and pose major global challenges,” World Bank Vice President Ceyla Pazarbasioglu said in his research, as quoted Sunday (6/28/2020).
“It’s an economic emergency. In addition, the global community must unite to find ways to rebuild a recovery that is as strong as possible to prevent more people from falling into poverty and unemployment.”
Finance Minister Sri Mulyani Indrawati revealed that if the Large-Scale Social Restrictions (PSBB) had been relaxed but the public was not spending, aka shopping, Indonesia could fall into recession.
In the Ministry of Finance projections, with the handling costs of Covid-19 starting to be distributed and PSBB being relaxed but with the support of spending, the third quarter and IV GDP could grow 1.4%.
“But if it’s deep [dengan asumsi tidak berbelanja] can be -1.6%. That could technically be a recession. “If the third quarter is negative and technically Indonesia can enter the recession zone,” said Sri Mulyani.
This scenario is included in the Ministry of Finance’s projections. Where in the third and fourth quarters GDP will grow 1.4% to negative 1.6%. “While the outlook for the whole year -0.14 to 1 percent positive,” said Sri Mulyani.
Sri Mulyani stressed that 2020 was an extraordinary year. Not in a positive context, but a very big challenge.
As a result of the corona virus pandemic, Sri Mulyani continued, the World Bank estimates that the global economy will contract or grow negative -5.2%. “The IMF (International Monetary Fund) we will see in the next few months, usually the July outlook. There must be a revision,” he said.
Indonesia, added Sri Mulyani, was no exception. In the second quarter of 2020, the former World Bank Managing Director revealed that the national economic contraction will be -3.1%.
“In the second quarter there will be a contraction because the PSBB (Large-Scale Social Restriction) is carried out and contributes to a large economic growth. This will affect the second quarter which we estimate is -3.1%,” he said.
If in two consecutive quarters the Indonesian economy is negative then it is definitely in a recession zone.
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