Indonesia Officially Experiences Recession, This is The Impact on Society
LiputanIslam.com— Indonesia has officially experienced a recession after the economic growth contracted for two consecutive quarters. Based on data from Statistics Indonesia (BPS), Indonesia’s economic growth in the third quarter of 2020 contracted by 3.49 percent and 5.32 percent in the second quarter of 2020.
Cumulatively from January to September, the economic growth contracted by 2.03 percent. Meanwhile, on a quarterly basis, the Indonesian economy grew 5.05 percent.
Read: Indonesia Officially Falls Into Recession
Finance Minister Sri Mulyani said the growth in the third quarter was better than the previous quarter because there was a process of economic improvement. However, this improvement was achieved by expanding the budget deficit.
According to data from the State Budget (APBN), the budget deficit in the period of January to September 2020 reached Rp 687.5 trillion, equivalent to 4.16 percent of gross domestic product (GDP).
“The third quarter is better than in the second quarter. The third quarter has recovered. The stabilization function of the APBN together with others is to overcome the blow to demand and supply, ” She said on Wednesday (4/11).
The Impact of Recession
Center of Reform on Economics (Core) economist Yusuf Rendy Manilet assesses that one of the effects of the recession is the increasing number of unemployment in Indonesia.
“The impact of this recession occurred in the third quarter, meaning that it has passed in the past three months. The most pronounced impact is an increase in unemployment because as stated by BPS, in August the number of unemployment increased, “he said on Thursday (5/11).
He explained that the increase in the number of unemployed was due to the lack of new job creation because the economic recovery was progressing slowly so that business actors held back their businesses.
“Business actors will still hold back the pace of business expansion so that the creation of new jobs in the fourth quarter will still be relatively small. Because it is still relatively small, of course, there will be potential for increasing the number of unemployment compared to last August, “he explained.
Meanwhile, according to the economist at the Institute for Development of Economics and Finance (Indef) Bhima Yudhistira, among the impacts of the recession on Indonesian society is a significant decrease in income in the middle and lower-class groups. This can affect the number of poor people to increase.
Moreover, the urban population will decrease while the rural population will increase. The village will become a place for unemployed migration from industrial estates to regions due to a wave of mass layoffs.
Another impact is the restraint in household consumption. In the midst of difficult economic conditions, people will tend to save money to buy only the things they need. (sh/detik/kontan)