Indonesia’s Economy Experiences Contraction, Poverty Ensured to Rise
LiputanIslam.com— Many international institutions have predicted that the world economy will contract this year due to the coronavirus pandemic (COVID-19).
The International Monetary Fund (IMF) assessed that global economic growth is predicted to experience the worst financial crisis since the Great Depression in the 1930s.
The economic contraction is also expected to happen in Indonesia. Finance Minister Sri Mulyani Indrawati projected that Indonesia’s economy will grow in the range of -0.4 percent to 1 percent. This figure is much lower than the previous projection of 2.3 percent.
“The outlook projection is -0.4 percent to 1 percent. The correction went down because we saw a deep enough contraction in the second quarter,” she said.
Febrio Kacaribu, head of the Ministry of Finance’s Fiscal Policy Agency (BKF), stated that with that projection figure, the number of poverty is likely to increase around 3.02 million to 5.71 million people. Then, unemployment will also go up by 4.03 million to 5.23 million people.
“Usually we grow (economic growth) 5 percent, but if we can maintain the figure at 0 percent, it will be good. However, it means poverty and unemployment will increase. Thus, the design of PEN (National Economic Recovery) is expected to reduce the risk of rising poverty and unemployment,” he stated.
He said to handle COVID-19 and restore the national economy, the government has allocated a budget of Rp 695.2 trillion. In detail, Rp 87.5 trillion is allocated for the health sector, Rp 203.9 trillion for social protection, Rp 120.61 trillion for business incentives, Rp 123.46 trillion for MSMEs, Rp 53.57 trillion for corporate financing, and Rp 106, 11 trillion for sectoral ministries and local governments. (sh/kompas/cnbcindonesia)