After experiencing a contraction in the second quarter of 2020, Indonesian government will take an extraordinary steps to boost the economy to survive in the third and fourth quarters of 2020, said the senior economic minister - Photo by CMEA Office

JAKARTA (TheInsiderStories) – After experiencing a contraction in the second quarter of 2020, Indonesian government will take an extraordinary steps to boost the economy to survive in the third and fourth quarters of 2020, said the senior economic minister. These steps need to be taken so the country could avoids the recession.

“The government, the community, and the business world including SOEs must participate,” coordinating minister for economic affairs, Airlangga Hartarto told the media in a virtual press conference, today (08/05).

As reported, the statistics bureau just reported Indonesia’ economic growth plunged to 5.32 percent in the second quarter of 2020 compared to last year. Compared to the previous quarter, the GDP also experienced a contraction of 4.19 percent.

Overall, Indonesia’ economy still grow positively 1.26 percent in the first semester of 2020 compared to last year. Head of the agency Suhariyanto rated, the two successive contractions make Indonesia practically entered the phase of technical recession.

Hartarto explained, the main strategy to accelerating the economic recovery is through pushes the government spending through the implementation of the National Economic Recovery Program (ERP), increasing public purchasing power and support the business sector. The more serious and structured COVID-19 handling program is expected to restore the confidence of the community and households to carry out their activities including spending, consumption or investment.

While, according to head of fiscal policy at finance ministry, Febrio Kacaribu, in a written statement said, the negative economic growth not only experienced by Indonesia but also many countries in world. In the second quarter of 2020, the United States contracts 9.5 percent, South Korea -2.9 percent, Singapore -12.6 percent and Hong Kong -9.0% percent.

He said, the pandemic and the widespread adoption of large-scale social restriction since March are major factors which affects the performance of the Indonesian economy. Now, he asserted, the economic activity in several regions has rise and gradually recovered as relaxation period began.

From the expenditure side, said Kacaribu, the negative growth occurred in all components, such as households -5.5 percent, cement sales -8.7 percent, commercial vehicle sales – 82.5 percent, imports of capital goods -20.1 percent, investments -8.6 percent, and government expenses -6.9 percent.

He asserted, the ERP is still in the early stages of implementation so it has not been able to compensate decrease in government spending. But social assistance spending grew very high up to 55.9 percent in the second quarter of 2020 and is expected to improve the consumption in the next quarter.

Written by Editorial Staff, Email: theinsiderstories@gmail.com