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Indonesia Has a Month Left to Prevent Recession

Heru Andriyanto
September 1, 2020 | 3:06 pm
A man helps a trader and his vendor cart cross a railroad in Kampung Grogol, Central Jakarta on August 24, 2020. (JG Photo/Yudha Baskoro)
A man helps a trader and his vendor cart cross a railroad in Kampung Grogol, Central Jakarta on August 24, 2020. (JG Photo/Yudha Baskoro)

Bogor. Indonesia has a month left to turn things around after experiencing a 5.32 percent contraction in its economy in the second quarter due to the economic impact of the coronavirus pandemic, President Joko “Jokowi” Widodo told all 34 governors in a video-teleconference on Tuesday.

If the third quarter results in a contraction cycle, the economy will fall into recession, he said.

“In the first quarter of 2020, our economy managed to grow by 2.97 percent, while many other countries saw a negative figure. However, we were at minus 5.32 percent in the second quarter,” the president said from the Bogor Palace in West Java.

“We still have a chance in September -- if we remain at the negative territory, it means we enter a recession,” he said.


He urged governors to speed up spending and to order district heads and mayors in their respective region to do the same, noting that less than a half of their budgets have been spent.

“According to August 27 data, the national average of provincial government spending reached only 44 percent, while cities and district have used only 48.8 percent of their budget,” Jokowi said. 

Only three provinces have managed to attain positive growth during the second quarter of the year, including Papua (4.52 percent), West Papua (0.53 percent) and Central Sulawesi (0.06 percent).

Meanwhile, three provinces have suffered the biggest contraction. Bali, whose economy depends largely on the tourism sector, was the hardest hit by the economic impact of the pandemic with a contraction of 10.98 percent, the president said.  

Jakarta saw a negative 8.82 percent and Yogyakarta reported a contraction of 6.74 percent.

The president also called on governors to do more in flattening the curve of new Covid-19 caseloads.

“For provinces where the caseloads remain high, I ask their governors to work harder and cooperate with the task force in order to slow down the caseloads,” Jokowi said, adding that the central government is ready to help. 

Overall, Indonesia is able to keep the Covid-19 outbreak under control, with a rapidly growing number of recoveries, he said.

The recovery rate in the Indonesian outbreak was a mere 15 percent in April but by the end of August the number of cured or discharged Covid-19 patients has accounted for 72.1 percent of the total cases, higher than the global average of 69 percent, he said.

However, a lot more need to be done to reduce the fatality rate from currently 4.2 percent to below the global average of 3.36 percent, the president said.

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