Pandemic Control Keeps Economic Recovery on Track

KOMPAS/RADITYA HELABUMI

Office buildings in Jalan Sudirman, Jakarta, Wednesday (5/5/2021). Indonesia\'s economic growth in the first quarter of 2021 is still negative. The Central Statistics Agency (BPS) noted that the economy in the first three months of this year was minus 0.74 percent. However, the economic recovery amid the Covid-19 pandemic has consistently improved compared to last year.

JAKARTA, KOMPAS - With improved conditions in the first quarter of this year (I-2021), business circles are optimistic that the economy will grow optimally, provided that Covid-19 pandemic mitigation efforts are maintained. Controlling Covid-19 is the key to sustaining economic growth.

Despite contracting 0.74 percent, the Indonesian economy in the first quarter showed improvement. Having gone down to the lowest point in the second quarter of 2020 with a contraction of up to minus 5.32 percent, economic performance began to lift up in the following three quarters, thanks to the recovery policies.

Given the current growth rate, Shinta Widjaja Kamdani, deputy chair of the Indonesian Chamber of Commerce and Industry (Kadin) said on Thursday (6/5/2021) that economic growth in the second quarter would be optimal.

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The second quarter’s growth is predicted at around 3 percent, which will still be below the government\'s target of around 7 percent. However, Shinta expressed her optimism about further improvement, expectedly boosted by Ramadan and Idul Fitri spending.

Pinning her optimism on the progress of pandemic mitigation efforts, she saw a potential drawback in economic recovery efforts in the case of a spike in Covid-19 cases.

According to Shinta, the labor-absorbed manufacturing industry needs time to achieve the pre-pandemic growth levels. The growth trend goes in parallel with the domestic spending rate.

KOMPAS/KARINA ISNA IRAWAN

Shinta Widjaja Kamdani, Deputy Chair of the Indonesian Chamber of Commerce and Industry (Kadin).

The implementation of the job creation law is expected to be able to help maintain and even accelerate economic recovery consistently throughout the year.

However, according to Franky Sibarani, a member of the Advisory Council of the Indonesian Employers Association (Apindo), it depends on the preparedness of the central and regional bureaucracy to implement an integrated licensing system or online single submission (OSS), which is designed to ease the business permit process. OSS will be in effect as of June.

The government has projected all components to grow positively in the second quarter -- including household, government consumption, investment and exports – to achieve a growth target of 6.9-7.8 percent, as disclosed by Coordinating Economic Affairs Minister Airlangga Hartarto.

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While enforcing a mudik (homecoming) ban as part of mitigation measures to curb the spread of Covid-19, the government remains hopeful that Ramadan and Idul Fitri can serve as economic leverage for the second quarter.

Among the steps to optimize spending is to ensure the disbursement of Lebaran holiday bonuses (THR) to private employees as well as 13th salaries and THR for civil servants, military and police members.

This article was translated by Musthofid.