Indef Talks of Potential Recession and How Govt Can Lessen the Impact

TEMPO.CO, Jakarta - Research Director at the Institute for Development of Economics and Finance (Indef), Berly Martawardaya, said that the public should not need to worry about the threat of a recession.

“Recession is just a number. We don't need to fret over it,” said Berly in a virtual discussion on Thursday, September 17, 2020.

A recession occurs if a country's economic growth experiences contraction or turns negative for two consecutive quarters. In the second quarter, Indonesia’s economy dropped to minus 5.3 percent. Therefore, the threat was looming over the archipelago if its growth rate is still minus in the third quarter.

However, Berly said that this would not be a problem as long as the government protected 40 percent of the poor from the threat of hunger considering those in the lowest decile are the most vulnerable to the economic crisis.

Therefore, the government must deliberate ways to keep improving the social safety net during the crisis then thinking about the welfare of society in general.

“As the law notes that the first task of the government is to protect all Indonesian people, then improve the public welfare,” he remarked.

Berly further revealed that Indonesia's economy still saw better performance than that of other countries. He cited Japan, which was recently confirmed to experience a sharp contraction of up to minus 27.8 percent, Singapore at minus 13.2 percent, Malaysia minus 17.1 percent, and Thailand minus 12.2 percent.

Read: Business Association: Recession Unavoidable, Economic Crisis Must be Averted

FRANCISCA CHRISTY ROSANA