Government spending to remain key support for economy: ministry

Government spending to remain key support for economy: ministry

Illustration - A worker passes in front of an under construction multi-storeyed building in the Kuningan area of Jakarta on April 3, 2020. (ANTARA/Dhemas Reviyanto/pras) 

Jakarta (ANTARA) - Government spending will remain the main support for national economic growth amid efforts for recovery, particularly in the fourth quarter, said Coordinating Economic Minister’s undersecretary for creative economy, entrepreneurship and SME competitiveness, M Rudy Salahuddin.

"The government spending components remain the main supporting force," Salahuddin stated at the Indonesia Digital Conference, held online here on Tuesday.

He said the government spending is aimed at maintaining the momentum for an economic recovery, which has been seen from the second to the third quarter of this year. After growing just 2.97 percent in the first quarter of 2020, Indonesia’s economy shrank 5.32 percent in the second quarter, but managed to narrow the contraction to 3.49 percent in the third quarter.

Salahuddin further explained that the higher economic contraction of 5.32 percent in the second quarter compared to growth of 2.97 percent in the first quarter was caused by declining consumption and investment in the wake of social restrictions that were applied to stem coronavirus transmission.

Moreover, he observed, the COVID-19 pandemic also led to an economic downturn in several provinces that were seen as the drivers of the economy. For instance, as many as 12 provinces, which contribute 67.8 percent to the economy, experienced an economic contraction in the third quarter of this year and clocked in growth of below the national average.

"In the period before 2020, our national economy was able to grow in the range of 5 percent to 6 percent, but we know that at the beginning of this year our economy was depressed due to a pandemic," he said.

Therefore, Salahuddin said, the efforts for economic recovery will be continuously supported, mainly through government spending, which is expected to help boost economic growth in the fourth quarter of this year.

"We should be grateful that the agricultural as well as communication and information sectors are still indicating positive growth," he remarked.

Some international institutions have also predicted that the Indonesian economy will rebound in the range of 5 to 6 percent in 2021.

However, Salahuddin said that an economic growth of 5 to 6 percent can only be realized if the government and people continue to work together.

“This (economic growth) can be achieved if we can commit to each other and also work together to increase national economic growth," he stated.

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