Office buildings in Jakarta's central business district on Tuesday. (Antara Photo/Aprillio Akbar)

Relaxing Social Restrictions May Not Boost Economy


MAY 27, 2020

Jakarta. Relaxing the large-scale social restriction, or PSBB, as the Indonesian government seems to be planning to do, may not necessarily boost an economy laid low by the coronavirus crisis, an economist from the Center of Reform on Economics said on Wednesday.

Economic growth in 2020 is likely to remain at minus 2 percent this year if the PSBB is phased out starting in the third quarter. 

"Growth of minus 2 percent is definitely possible if the PSBB is extended until the third quarter and the pandemic is still not fully under control. That's the worst-case scenario," Yusuf Manilet told Investor Daily.

According to Yusuf, the economic impact from the Covid-19 pandemic has already started to hit in the second quarter.


Meanwhile, the government might only begin relaxing the social restrictions in the third quarter, and even then not entirely. 

Yusuf said Indonesia should not rush into a "new normal" since the pandemic curve in the country has not shown signs of flattening. 

"Countries like Japan only start to apply new normal protocols after their Covid-19 cases consistently showed a downward trend," he said.

Yusuf said the government is in a dilemmatic position because the PSBB also hurts the economy.

"I understand why the government is already preparing for the new normal, at least in provinces where Covid-19 cases are on the decline," he said.

Relaxing the restrictions should only be done if the government has the capacity to do more PCR testing and contact tracing, according to Yusuf. 

On Tuesday, the government issued new normal guidelines that will allow businesses, including shopping malls, to reopen in early June