The economist from PT Bank Mandiri Tbk, Andry Asmoro, sees that Indonesian economic growth will be contractions around 1 to 2 percent of gross domestic products (GDP), in this year caused the impact of the pandemic - Photo: Privacy

JAKARTA (TheInsiderStories) – The economist from PT Bank Mandiri Tbk, Andry Asmoro, sees that Indonesian economic growth will be contractions around 1 to 2 percent of gross domestic products (GDP), in this year caused the impact of the pandemic. The reasoned, he said, the Southeast Asia largest economy’ engines growth, household consumption and investment weakened.

“Household consumption can be minus 2.4 percent in this year and the investment minus 4.6 percent compared to last year (YoY),” he told the media in a virtual conference on Friday (09/25).

Asmoro explained, the challenges that will still be faced by Indonesia until the end of this year is the spread of COVID-19 and Indonesia must focus to maintaining the number of the cases. If the cases continue to rises, he rated, it will result in a stagnant recovery process.

Earlier, minister of finance, Sri Mulyani Indrawati, sees the economic growth in the third quarter of 2020 will be contraction by 2.8 to 1 percent of the GDP. Its means, Indonesia could enter a recession, after contraction of 5.32 percent in the second quarter.

For the whole year, the growth to be minus 1.7 to 0.6 percent. The government’ projection inline with several international institutions. The Organization for Economic Co-operation and Development rated Indonesian economy could ended minus 3.3 percent, Asian Development Bank minus 1 percent, the International Monetary Fund minus 0.3 percent, and the World Bank around zero percent.

“Pandemic is still the main factor determining our economic activities and recovery. The improvement in July is still continuing, but we see signs that it is still very fragile. The main keys are consumption and investment. If consumption is still negative even the government has all out, it will be difficult to enter neutral this year,” she told reporters during a virtual conference on Thursday (08/25).he explained.

The minister explained, Indonesia’ gross domestic product (GDP) contraction in the second quarter mainly occurred on the consumption and investment side. This is partly due to restrictions on community mobility in line with the implementation of the large-scale social distancing. The state budget stimulus in the form of social assistance for the poor, vulnerable to poverty, and affected by the COVID-19pandemic is very helpful to contain a deeper economic contraction, she adds.

She continued, the realization of state revenues by the end of July had reached Rp922.25 trillion (US$63.17 billion) or 54.25 percent of the targets, but grew negatively at 12.37 percent compared to last year. The realization of tax revenues recorded of Rp601.91 trillion or 50.21 percent of this year’ target, customs and excise worth of Rp109.06 trillion or 53.02 percent of the targets or grew by 3.71 percent (YoY), and non-tax revenues of Rp208.81 trillion or 70.99 percent of the targets.

While, the realization of state expenditure in the same period amounted to Rp1,252.42 trillion or around 45.72 percent of this year’ ceiling, including the realization of central government spending of Rp793.60 trillion or grew 4.25 percent (YoY) and realization of transfers to regions and village funds of Rp458.82 trillion or a negative growth of 3.4 percent (YoY).

Indrawati also reported that the realization of the budget deficit until the end of July was recorded at Rp330.17 trillion or around 2.01 percent of GDP. The realization of budget financing until July 2020 has reached Rp502.97 trillion (48.40 percent of this year’ ceiling), mainly sourced from debt financing.

Realization of debt financing by the end of July of 2020 worth of Rp519.22 trillion, consisting of state bond (net) Rp513.41 trillion and loans (net) of Rp5.81 trillion. The government has also realized investment financing expenditures of Rp16.50 trillion, of which capital injection disbursements to state-owned enterprises Rp9.50 trillion and investment to state agency amounting to Rp7.00 trillion.

In 2021, Indonesian economic growth is targeting around 4.5 to 5.5 percent, inflation 3 percent, the 10-year state bond interest rate is 7.29 percent, Rupiah Rp14,600 per US Dollar, the price of Indonesian crude oil is US$45 a barrels, oil lifting 705,000 barrels per day, and gas lifting 1.01 million barrels of oil equivalent per day.

Next year, Asmoro estimates that the national economy will grow by 4.4 percent.

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