LiputanIslam.com— Indonesian Chamber of Commerce and Industry (Kadin) projects Indonesia’s economic growth in the second quarter will plummet at -4 percent to -6 percent.
“We at Kadin believe that there will be a contraction in the economic growth of -4 percent to -6 percent in the second quarter of 2020,” Rosan Perkara Roeslani, the Chairman of Kadin, said on Saturday, July 4.
Rosan forecasted Indonesia’s economy to contract sharply as the stimulation process for handling COVID-19 is still very slow.
Read: Indonesia’s Economy Experiences Contraction, Poverty Ensured to Rise
“The absorption in various fields such as new health is still 1.54 percent, social protection is at 28.63 percent, the business incentive is 6.8 percent, UMKM is still at 0.06 percent, the corporation is 0 percent and the sectoral is at 3.65 percent,” he remarked.
The slow progress of the stimulation will make the pressure on health recovery, and economic and social security networks more severe. In addition, it will cause economic growth contracted in the third quarter so that technically Indonesia is in a recession phase.
From the trade side, the surplus that occurred in April and May 2020 was due to a decline in imports, which was higher than the decline in exports. Meanwhile, on the investment side, the decline in the realization of foreign investment is expected to decline more in the second quarter.
He said the COVID-19 uncertainty not only affected trade and investment flows, but also the decline in domestic purchasing power or consumption in the second quarter. This can be seen from the decline in the real sales index by-16.9 percent in April and -22.9 percent in May, and the decrease in the consumer confidence index by -33.8 percent in April and -39.3 percent in May.
In this case, Coordinating Minister for Economic Affairs Airlangga Hartarto stated that the government must find ways to prevent domestic economic growth from entering the negative zone until the end of the year.
According to him, economic growth must be lifted at least in the third and fourth quarters so that the Indonesian economy is not accumulatively falling.
“The third and fourth quarters (economic growth) are expected to increase, but we know it can only be done by the role of the government,” he said. (sh/merdeka/tempo/liputan6)