JAKARTA (XINHUA) – Indonesia’s economy finally plunged into a recession after experiencing minus growths in two consecutive quarters this year.
Finance Minister Sri Mulyani Indrawati recently said if the country’s economic growth underwent contractions in two successive quarters, its economy would enter a recession.
Head of the Central Agency of Statistics Suhariyanto announced Indonesia’s economy contracted by 3.49 per cent in the third quarter 2020.
Thus Indonesia officially entered its recession like other countries did as they experienced negative economic growths within two consecutive quarters during the COVID-19 pandemic, Suhariyanto told journalists.
The realisation of the economic growth in the third quarter was worse than President Joko Widodo’s estimation at minus three per cent and Indrawati’s prediction at minus 2.9 per cent.
The agency earlier announced that the Indonesian economy contracted by 5.32 per cent in the second quarter this year due to the COVID-19 pandemic which has been battering the country’s economic activities.
Although experiencing negative growth, the Indonesian economy increased by 5.05 per cent quarterly in the third quarter 2020, showing a signal of a significant recovery, he said.
“Compared to the economic growth in the second quarter, that in the third quarter is better. Indonesia’s economic growth in the second quarter experienced a deeper contraction,” Suhariyanto noted.
Despite the current recession, the country remains optimistic that its economy would continue to grow in a positive trend as indicated by the 5.05 per cent increase quarterly in this year’s third quarter.
“We passed the worse period in the second quarter. In the third quarter, the economy has reached the turning point to a positive zone,” Finance Minister Indrawati said in a press statement.
The realisation of state budget drastically increased by up to 15.5 per cent in the third quarter, the minister said, adding that the budget was distributed to social assistance and business communities including small and medium scale enterprises which have been playing a role in the country’s economic improvement.
In general, improvement was also seen in expenditures including the government’s consumption which underwent a positive growth of 9.8 per cent in the third quarter compared to negative 6.9 per cent in the previous three months, she said.
The export performance increased from minus 11.7 to minus 10.8 per cent, but the import performance dropped from minus 17 per cent to minus 21.9 per cent, while the household consumption grew from minus 5.5 per cent to minus four per cent.
“In the future, the government will continue to make efforts to accelerate the national economic recovery, particularly accelerating regional budgets which now only reach 53.3 per cent,” the minister was quoted by Pikiran-rakyat.com as saying.
In the health sector especially in mitigating the COVID-19 pandemic, the government would continue to conduct testing, tracing and treatment measures including preparing vaccines, she added. “We hope the turning point would continue in the fourth quarter, and we have to take advantage of the momentum in the third quarter to recover the economy in 2021.”
However, she admitted that amid the optimism, the government is still facing challenges, especially that on the increase in the unemployment due to the COVID-19 outbreak.
The Central Agency of Statistics reported that the unemployment rate in Indonesia rose by almost 2.7 million people in the third quarter bringing the total number to 9.7 million.
Economic observer from the Center of Reform on Economics (Core) Indonesia Mohammad Faisal opined that the economic contraction by 3.49 per cent was still deep as the government has eased the large-scale social restrictions to curb the COVID-19 infections during that period.
“I thought before that the contraction was not that deep although it was better than that in the second quarter,” Faisal told Antara news agency.