JAKARTA (TheInsiderStories) – Governor of Bank Indonesia (BI), Perry Warjiyo, optimistic that the economic growth will return to a positive in the fourth quarter (4Q) of 2020 and get out of from the recession zone. In the 2Q and 3Q of this year the country experienced a contraction 5.32 percent and 3.49 percent, respectively.
“We believe Indonesian economy improvement will continue. Economic growth will be positive in the fourth quarter of 2020 and will go to 5 percent in 2021, and continue to rise to around 6 percent in the next five years,” he said on Monday (11/16).
He asserted, the improvement of the domestic economy will be supported by public consumption, exports and investment. He also believed that the financial system stability maintained and Rupiah movement will more stable and tend to strengthen, inflation rate is low, current account deficit decreasing, and the banking system is healthy.
“Our interest rate has been reduced by 1 percent to 4 percent, and we have also carried out large liquidity injections or quantitative easing, more than Rp 670 trillion (US$47.86 billion) or 4 percent of GDP,” said Warjiyo.
Indonesia is officially entering a period of economic recession, which is marked by contraction in the Gross Domestic Product (GDP) for two consecutive quarters. The nation officially entered the abyss of recession for the first time since 1999.
On a quarterly basis (QtQ), the office reported that Indonesia’ GDP was able to grow positively by 5.05 percent in the 3Q of 2020. However, the cumulative for January – September 2020 the economy still contracted 2.03 percent.
Previously, minister of finance, Sri Mulyani Indrawati, saw that Indonesian GDP in the 3Q was getting better even though was declared a recession. The former Managing Director of the World Bank also sees the absorption of state spending increased by 15.5 percent in the third quarter, driven by social assistance spending.
However, the International Monetary Fund (IMF) in its latest economic projections, revised its ‘forecast’ for global economic growth and a number of countries, including Indonesia. The Fund now estimates that the world economy will post a contraction 4.4 percent, improved compared to the last projection minus 4.9 percent.
The institute which is headquartered in Washington, has also cut Indonesia’ economic growth. In June, the IMF estimated that Indonesia’s economy would contract by 0.3 percent this year but in the October report, the forecast worsened to a contraction of 1.5 percent.
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