Sri Mulyani Predicts Deeper Economic Contraction as PSBB Reimposed

TEMPO.CO, Jakarta - Finance Minister Sri Mulyani Indrawati predicted that Indonesia's economy in the third quarter of 2020 could suffer deeper contraction than it was previously estimated following the reimposition of the large-scale social restriction (PSBB) in Jakarta.

Sri mentioned that the economic projection for the third quarter was still in accordance with the report submitted to the House of Representatives (DPR), at 0 to minus 2.1 percent. “But we estimate that the lower end can be below 2.1 percent,” said the minister at a press conference in Jakarta, Tuesday, September 15, 2020.

The forecast referred to the first PSBB imposed by Jakarta on April 9, 2020. At that time, the country’s economy contracted from 2.97 percent year on year in the first quarter to minus 5.32 percent yoy in the second quarter. Jakarta fell even further from 5.06 percent to minus 8.22 percent yoy.

Sri admitted that PSBB volume 2 is different from the first one. Quoting Jakarta Governor Anies’s announcement, the current policy would focus on the virus transmission in offices. However, workplaces are still allowed to open at 25 percent of capacity.

If the economy was predicted to grow zero to minus 2.1 percent in the third quarter, Indonesia’s economy would see 0.2 to minus 1.1 percent growth this year. But due to the PSBB in the capital city, Sri Mulyani said her side was prepared for the possibility of minus 1.1 percent.

“We will later observe the assessment of the two-week movement (the period of PSBB in Jakarta),” she said.

Read: Covid-19 Hits Economy, Sri Mulyani: We Must have Imaginations

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