Maintain the Economy, Handle Covid-19 More Optimally

KOMPAS/RADITYA HELABUMI

Visitors to ITC Mangga Dua, Pademangan, North Jakarta, Thursday (5/11/2020). The Covid-19 pandemic that has hit Indonesia since March 2020 has reduced national economic growth for two consecutive quarters.

Indonesia officially entered a recession in the third quarter, this year despite some economic improvements during the period. Optimizing the handling of Covid-19 is an important part of maintaining the economy.

JAKARTA, KOMPAS — Negative economic growth for two consecutive quarters has pushed Indonesia into a recession. However, the economic contraction of 3.49 percent in the third quarter was not as deep as 5.32 percent in the second quarter.

Statistics Indonesia (BPS) said in Jakarta on Thursday (5/11/2020) that although the economy was still contracting, a number of sectors had shown signs of recovery during the third quarter, as seen in the quarterly economic growth data. The Indonesian economy rebounded 5.05 percent quarter-on-quarter (qoq) from July to September.

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Almost all components of expenditure and production showed some improvements from the previous quarter. Meanwhile, Indonesia\'s gross domestic product (GDP) based on current prices reached Rp 3.89 quadrillion (about US$268.60 billion) in the third quarter of 2020.

The head of the National Development Planning Agency (Bappenas), Suharso Monoarfa , said the positive trend in the third quarter of 2020 indicated that the policies taken by the government were able to respond and adapt to the condition during the period. The government would continue its balanced policy to maintain the growth, he said. "We will maintain the balance, not just prioritize health while ignoring the economy, "he said.

RIAN SEPTIANDI

Suharso Monoarfa

Asep Suryahadi, a researcher at the SMERU Research Institute, said it was necessary to further identify whether the performance of several economic sectors that had begun to show recovery in the third quarter of 2020 would continue in the next quarter.Business sector

Of the 17 business sectors that support the economy, 10 sectors still grew negatively in the third quarter of 2020. The business sectors that contracted the most were food and beverage, accommodation, transportation and warehousing, trade, construction and mining.

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BPS noted, the processing industry was also still contracting and recorded a negative growth rate of 4.31 percent on an annual basis. However, the figure showed an improvement compared to the minus 6.19 percent in the second quarter.

"Economic improvement, especially the performance of the business sectors, must still be carried out in accordance with health protocols," said Asep.

Asep emphasized that the signs of economic recovery should not reduce efforts to cope with Covid-19. Currently, several countries are reimposing territorial restrictions due to the increase in new infection cases. The territorial restrictions will bring a negative implication on the economic recovery.

KOMPAS/ELSA EMIRIA LEBA

Asep Suryahadi

The chief economist of the Center for Strategic and International Studies (CSIS), Yose Rizal, said that the government\'s efforts to drive the economy through “ accelerate and put a break ” policy in economy and health had begun to have an impact on economic growth. However, these improvements would be artificial if the health aspects were not handled properly, he said.

The CSIS Economic and Health Matrix Data which compares the movement of people and data on Covid-19 cases in the July-October period shows that the majority of provinces were in quadrant II category, which indicated that economic condition were improving and health risks were declining. However, the economic activities were considered low due to the relatively slow movement of the people.

According to the data provided by the Covid-19 Handling Task Force, there were an additional 4,065 new Covid-19 cases on 4 Nov. 2020, bringing the total confirmed cases to 425,796. Meanwhile, the number of the patients who had recovered, increased by 3,860 people, bringing the total number of recovered patients to 357,142 people.

The number of deaths due to Covid-19 increased by 89 people, bringing the total number of people who died due to Covid-19 to 14,348 people.

The remaining government budget should be disbursed immediately, while the people’s discipline in implementing health protocols should be improved.

The deputy chairman for the Economic Zone Development at the Indonesian Chamber of Commerce and Industry (Kadin), Sanny Iskandar, said that the government could raise the confidence of business actors, such as in conducting business expansion through consistency of policies. The remaining government budget should be disbursed immediately, while the people’s discipline in implementing health protocols should be improved, he said.

Apart from the production side, the economic recovery was also supported by the government’s expenditure which grew 9.76 percent. Other economic growth components still contracted , although relatively better than in the previous quarter, such as household consumption, which shrank 4.04 percent and investment which fell 6.48 percent.

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The head of BPS, Suhariyanto, said that government consumption grew high due to an increase in the distribution of social assistance (bansos) and the expenditures for goods and services, as well as personnel spending, including incentives for health workers. Several spending allocations also increased, such as those for disaster management and social empowerment.

KOMPAS/CYPRIANUS ANTO SAPTOWALYONO

Suhariyanto

BPS’ August 2020 National Labor Force Survey showed that Covid-19 severely affected the labor sector. As many as 29.12 million people or 14.28 percent of the 203.97 million working age population were affected by the pandemic. The number of unemployed people increased by 2.56 million people to 9.77 million people. The pandemic also caused the workers’ average wage to fall by 5.18 percent to Rp 2.76 million per month. This condition must be watched out so that it does not have a significant impact on consumption growth.

Finance Minister Sri Mulyani Indrawati said household spending continued to show an improvement partly due to the distribution of the social assistance. However, the consumption of the upper-middle class was also still restrained because their consumption characteristics were dominated by goods and services that are sensitive to mobility. The consumption of the upper-middle class would remain under restrain until the Covid-19 could be overcome.

KOMPAS/KARINA ISNA IRAWAN

Sri Mulyani Indrawati

On the other hand, one of the factors driving economic improvement was the government’s expenditures.

The government spending grew 15.5 percent by the end of September 2020, mainly due to the disbursement of the social assistance and financial support for the business world, including micro, small and medium scale enterprises (MSMEs). The increase in the spending was seen in the growth in government consumption.

"The acceleration of the economic recovery will be carried out through fiscal policy such as the acceleration of the disbursement of the spending of the central government and regional governments," said Sri Mulyani. (KRN/AGE/CAS/LAS)