Poor Covid-19 Policies; Indef Warns of Recession in Q3

TEMPO.CO, Jakarta - Institute for Development of Economics and Finance (INDEF) senior economist Didik J. Rachbini said that the way Indonesia deals with Covid-19 is still bad. The situation, he said, would lead to further economic growth contraction in the third quarter.

Didik highlighted Indonesia's economic growth in the second quarter that fell to -5.32 percent.

"I am sure that in the third quarter we will enter a recession with this pandemic. The negative growth would be even higher. In quarter four, if the efforts are still like this, [the economy] will slump further," he said in a virtual conference, Thursday, August 6.

Didik said that Q2's economic growth was far from what Indef expected. "Indef did not think it would reach -5.32 percent. This is beyond our projections," he said.

He said that the way the government deals with the pandemic is the main key to economic recovery. Meanwhile, what is happening now is the opposite, with new conformed cases increasing.

Didik said that several policies by the government have made the situation worse. Starting from regional lockdowns amid the infection peak, to reopening the economy when cases were still high.

What's more, the government is currently giving local governments the authority to mitigate the situation regionally, where they don’t have strong resources and funding compared to the central government. "Don't dream of overcoming a recession if the pandemic is not resolved," he said.

Meanwhile, Indef's deputy director Eko Listiyanto said that to avoid recession, the first thing to do is save the people.

Read: Sri Mulyani Says Economy Has Begun to Improve Since June

Eko Wahyudi