Economic contraction hit 5 percent and many pinned the blame on the government’s failure to mitigate the virus outbreak that led to the national economy’s decline.
Furthermore, the growth of bank loans was extremely low at around 0.6 percent year on year as of August 2020 (based on Bank Indonesia data) despite the government funding that had been allocated for the banking industry.
Despite having sufficient savings, the slow disbursement of government funds affected the money supply for businesses and society thus significantly impacting the national economy.
It did not take long until many Indonesians found themselves out of work amid the continued spiral of Indonesia’s first wave of coronavirus infections.
The Indonesian Chamber of Commerce (KADIN) estimates that around 6 million Indonesians have been laid off or have their contract terminated.
With the end of the pandemic nowhere in sight, more Indonesians will be out of work.
Indonesian small and medium enterprises (SMEs) are the backbone of the country's economy and have often been the safety net during crises such as the 1998 Asian Financial Crisis and the 2007 Global Financial Crisis.
However, Indonesian SMEs were no match to the Covid-19 pandemic, and many employers forcibly slashed their employee numbers.