Jakarta, CNBC Indonesia – The recession issue re-emerged this week after Singapore’s economy contracted two consecutive quarters. The “ghost” of the recession will still “haunt” global financial markets next week. Moreover, the United States (US) will release data on gross domestic product (GDP) quarter II-2020 on Thursday 30 June.
Indeed, the data will only be released next 2 weeks, but market participants must have begun to get ready to “welcome” it.
In the first quarter of 2020, the US economy experienced a contraction of 5%, while in the second quarter of 2020, Reuters poll results showed GDP was predicted to contract 32.4%, really nyungsep. So that only extraordinary miracles that can make the US free from recession in the second quarter of 2020.
But looking at economic data released recently, the US economy has shown recovery at the end of the second quarter of 2020. So there is a possibility that the contraction in economic growth is not as bad as the results polling Reuters.
If that happens, the effects of the US recession will not flare up global financial markets, but instead strengthen. Looking at the movement of the Singapore stock market, which only weakened 1.29% this week despite a recession, the strengthening of global stock markets may occur in response to US GDP data.
Before the US “legitimate” recession, this week there are also quite a lot of issues that will affect the domestic financial markets.
The increased risk of recession in Indonesia remains a negative sentiment. On Thursday (07/16/2020) the World Bank released the July 2020 Indonesia Economic Prospects report. The report was given the title The Long Road to Recovery.
The agency, which is headquartered in Washington DC (US), estimates that the Indonesian economy will not grow, aka 0%. But the World Bank has a second scenario, namely the Indonesian economy will contract by -2% by 2020 if the global recession turns deeper and domestic social restrictions are tighter.
“Indonesia’s economy could have entered a recession if social restrictions continued in the third quarter-2020 and fourth quarter-2020 and / or the world economic recession was worse than previously estimated,” the World Bank report said.
On the same day as the report was released, the Governor of DKI Jakarta, Anies Baswedan, extended the Transitional Large-Scale Social Limitation (PSBB) transition for 14 days, due to the spread of corona virus cases which was still quite high. The transition PSSB which continues to be extended risks making Indonesia’s economic recovery run slower and longer.
July is the beginning of the third quarter of 2020, if the PSBB transition continues, meaning that not all economic sectors have been opened yet, then there is a risk of economic growth minus. Understandably, DKI Jakarta contributed 29% of the national gross domestic product (GDP) in 2019.
So if GDP is reduced again in the third quarter of 2020, then Indonesia will officially experience a recession, given that economic growth in the second quarter of 2020 is projected to experience a contraction.
Previously, the Minister of Finance, Sri Mulyani Indrawati, previously estimated that the April-June economy would contract in the range of -3.5% to -5.1%.
While GDP in the third quarter of 2020 was forecast in the range of -1% to 1.2%. That means there is indeed a risk that Indonesia will experience a recession in the third quarter of 2020.
–
