Semarang, 21 November 2020. The Diponegoro University Master of Economics Program held an Economic Seminar entitled “The Covid-19 Pandemic and Indonesia’s Macro Economy: Projections, Solutions, and Coordination”. The event was moderated by Dwiyanto Cahyo Sumirat (Chairman of the Payment System Supervision Team, Bank Indonesia Central Java Representative Office) and as the speaker was Eka Chandra Buana (Director of Macro Planning and Statistical Analysis, National Development Planning Agency). The Economic Seminar was attended by 165 participants
Eka Candra said that during the Covid-19 outbreak, economic policy followed the health factor. There are two scenarios that the tight handling of Covid-19 will cause the economy to fall sharply and can recover quickly, while the second scenario is slow handling, the economy will not decline too sharply, but the recovery is slow. And Indonesia experiences a second scenario. So that compared to other countries, the recovery of Indonesia’s activities has been slow
In particular, Indonesia experienced contraction, in the second quarter of 2020 it was -5.32% and in the third quarter of 2020 it was -3.49%. although the contraction in economic growth in the third quarter of 2020 was relatively low, namely -3.5%, but on a yoy basis compared to the third quarter of 2019 the decline was quite large, namely -8.51%
In terms of expenditure in the third quarter yoy, all components experienced contraction (household consumption (-4.04%), LNPRT consumption (-2.12%), investment (-6.48%), exports (-10.82%) imports (-21.86%) except consumption government which grew 9.76%. Government consumption grew significantly, driven by accelerated PEN spending.
When viewed from the side of spending, government consumption is arguably a vital part of dealing with Covid-19. Therefore, the government revised the maximum limit of the budget deficit through a Perpu, which was 3% to 5% then 5.7% and finally a deficit of 6.34%.
In terms of business fields, the sector with the largest contribution, the manufacturing industry experienced a deep contraction of 4.31%. agriculture, health services, information and communication, water supply, education services, real estate and government administration grew positively. The transportation and warehousing sectors, the provision of accommodation and food and beverage and company services have experienced the biggest impact from Covid-19.
The decline in several sectors and growth in other sectors have adapted some areas, especially in the agricultural sector. In Bali, for example, because tourism fell during Covid-19, eventually many returned to the village and started doing business in agriculture.
Viewed from per province, all provinces experienced contraction in the third quarter of 2020 except for North Maluku (6.7%) and Central Sulawesi (2.8%). And what needs to be highlighted is Bali, because in the second quarter of 2020 it had contracted -11% and in the third quarter of 2020 it was getting worse by -12.3%.
Indonesia’s economic growth outlook 2020
Starting to start the spread of the Covid-19 case will be able to encourage improvements in household consumption and investment. The increase in household consumption will also be driven by the number of days off due to the transfer of collective leave. The impetus for government consumption spending is expected to slow down in the fourth quarter of 2020 with the remaining budget. Meanwhile, export performance will experience pressure in line with the second wave.
In terms of business fields, significant improvements are expected to occur in the sector of providing accommodation and food and drink, transportation and warehousing, as well as trade in line with the spread of Covid-19 and the number of holidays in the fourth quarter of 2020. Meanwhile, the agricultural sector will face the risk of phenomena La Nina which has an impact on agricultural production. The manufacturing industry is expected to experience gradual improvement. November Manufacturing PMI still indicates a contraction in this sector. Information and communication sector; Health services will be the sector with the highest growth in the fourth quarter.
The short-term recovery strategy implemented is controlling Covid-19 by implementing the Health protocol; increased testing, tracing and isolation capacity; as well as improving health facilities and infrastructure. In addition, Fiscal stimulus was also carried out through the PEN program with acceleration and expansion of social assistance; accelerated financial assistance, restructuring and lending to MSMEs and corporations; as well as other accelerated government spending, including capital expenditures.
Targets and Policy Direction of KEM in 2021
The 2021 National Development Goals are Poverty Levels of 9.2-9.7%; Economic Growth 5%; Open Unemployment Rate (TPT) 7.7-9.1%; Gini Ratio 0.377-0.379; Human Development Index 72.78-72.95; Reduction of Greenhouse Gas (GHG) Emissions 23.55-24.05.
The 2021 economic growth target is 5%. From the production side of the manufacturing industry (5%); agriculture (3.6%); Trade (4.8%); provision of accommodation and food and drink (6.1%); information and communication (9.2%); construction (5.9%); and Mining (1%). In terms of household and LNPRT consumption expenditures (4.7%); Government Consumption (5.8%); Investment (6.6%); Exports (4.5%) and Imports (5.9%). In terms of household and LNPRT consumption expenditures (4.7%); Government Consumption (5.8%); Investment (6.6%); Exports (4.5%); Imports (5.9%).