Economy Contracts by 5.32 Percent, Presidential Staff: Indonesia Hasn’t Entered a Recession



Jakarta,— President Joko Widodo’s Executive Staff for Economy Arif Budimanta emphasized that Indonesia has not experienced a recession despite the fact that the economic growth in the second quarter of 2020 is -5.32 percent.

Arif explained that a recession occurs when the economy of a country grows negatively for 2 consecutive quarters. Therefore, if Indonesia’s economy in the third quarter of 2020 grows positively, the threat of a recession can be avoided.

“It can’t be called a recession yet. The economic consensus around the world states that a recession is a consecutive negative economic growth for 2 quarters calculated on an annual basis or year on year. Indonesia can still avoid a recession if our economic growth in the third quarter annually reaches a positive value,” he remarked on Monday (10/8).

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He said that the economic contraction in the second quarter had been predicted beforehand in line with the large-scale social restriction (PSBB) due to the COVID-19 pandemic.

In addition, economic contraction also occurred in almost all countries with deeper rates than Indonesia. For example, the European Union reached -14.4 percent, Singapore reached 12.6 percent, the United States reached 9.5 percent, and Malaysia reached -8.4 percent.

“It means that our condition is relatively better compared to some of these countries because, since the beginning, the president gave directions to carry out counter-cyclical programs and facilities to improve the domestic economy, especially public consumption so that it does not make our economy contract even further,” he said. (sh/market.bisnis/kompas)