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Indonesia Recession in Q3 May Not As Bad As It Seems: Finance Minister

September 8, 2020, 12.45 AM

JAKARTA, – Though the Indonesian economy is likely to go into a recession in the third quarter of this year, it may not as bad as it seems following a sign of recovery in some sectors, according to a top official.

Finance Minister Sri Mulyani did not dismiss the possibility of the recession as this year’s third-quarter economic performance is expected to fall between negative 2 percent and zero percent.

If the economy remains in the negative zone, then the country will go into a recession after experiencing negative economic growth in two consecutive quarters. In the second quarter, the economy contracted 5.32 percent.

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“Although the government spending has been accelerated, consumption and investment have yet entered the positive zone because people's activities are still not normal,” said Sri Mulyani after attending a meeting with the House of Representatives budget committee (Banggar) on Monday, September 7.

“If this happens, technically in the third quarter we enter the negative zone and the recession occurs,” the minister said.

“However, it does not mean that the condition will become very bad because the contraction is smaller and there will be a recovery in the sector of consumption, investment through the government spending,” the minister added.

The former World Bank managing director said the government is currently working to accelerate its spending to recover not only in the consumption and investment sector but also in export performance.

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From July to August, she said, the export sector saw an improvement in its economic performance.

“With such an increase in the previous month, we expect the economic growth in the third quarter will be better than the second quarter after a deeper contraction of 5.3 percent,” she said.

Besides, she said, although it contracted 5.32 percent in the second quarter, the country’s economic condition was better than in some other countries that contracted 17 percent to 20 percent.

“We continue to accelerate the government spending, the economic recovery program, and export activities so that consumption and investment will gradually recover,” she said.

She added that it is hoped that the performance in the third quarter will improve and will be maintained until the fourth quarter.

(Writer: Mutia Fauzia | Editor: Bambang P. Jatmiko)


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