Indef sees economy growing 2% in Q2, recession easing

Indef sees economy growing 2% in Q2, recession easing

Illustration: Vehicles ply on Jalan Jenderal Sudirman, Jakarta on May 5, 2021. (ANTARA FOTO/Aprillio Akbar/wsj)

Handling COVID-19 remains significant since the key to increasing consumer confidence is a reduction in daily cases of COVID-19 and restoration of population mobility
Jakarta (ANTARA) - The Indonesian economy will show positive growth of two percent (year on year) in the second quarter of 2021, economic observer with Institute for Development of Economics and Finance (Indef), Bhima Yudhistira, has forecast.

 

The economy had contracted 0.74 percent in the first quarter of this year.

 

"Our initial estimate is that if the economy grew positively by about two percent in the second quarter, the increase should be appreciated. It means that Indonesia is already out of the path of recession," Yudhistira told ANTARA here on Tuesday.

 

He listed several factors that could contribute to the positive growth projection, in line with efforts to deal with COVID-19, which, he said, need to be continuously improved.

 

"Handling COVID-19 remains significant since the key to increasing consumer confidence is a reduction in daily cases of COVID-19 and restoration of population mobility," he pointed out.

According to Yudhistira, several factors could help boost economic recovery in the second quarter, including public consumption that needs to be maintained, exports which need to be optimized, and the business climate in the regions that needs to be continuously supported.

 

The role of micro, small and medium enterprises (MSMEs) is also significant to ensure the absorption of the open workforce at a time when the recovery in the formal sector is not yet comprehensive, he noted.

 

The government also needs to prevent the potential increase in COVID-19 cases by providing health facilities and speeding up vaccinations, he added.

 

Such strategies must be carried out considering many tourist attractions have been opened and shopping centers have begun receiving more visitors, which has raised fears of increased risk of COVID-19 transmission after Eid al-Fitr, he said.

 

"If cases rise high, it could lead to tighter social restrictions," he added.

 

In addition, the government is expected to continue to increase spending, which is an important component of economic recovery, while spending performance recorded throughout 2021 has not met expectations, he said.

 

The realization of the budget for national economic recovery as of May 11, 2021 has reached Rp172.35 trillion, or 24.6 percent of the ceiling of Rp699.43 trillion, and an addition of Rp49.01 trillion from the realization of Rp123.26 trillion in the first quarter of 2021, he said.

 

The observer said that local governments are still slow in absorbing budgets, with most of the budgets tending to be realized at the end of the year.

 

"There are still local government funds of Rp182 trillion remaining in the bank. In fact, when the homecoming ban was enforced, the economic recovery in big cities and rural areas tended to experience imbalances," Yudhistira noted.

 

Hence, the government must impose tough sanctions on local governments that hold funds in banks so that economic recovery in urban and rural areas can be achieved simultaneously, he advised. (INE)


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