"The outlook for economic growth in the third quarter is expected to weaken, lower than the projection of 6.5 percent, as the emergency PPKM on July 3-20 will be relatively tighter, almost the same as the situation during the February-March period," Sri Mulyani noted during an online press conference here on Friday.
The minister remarked that the rate of economic growth in the third quarter will be determined by the duration of the emergency PPKM. If the restrictions only last for a fortnight and are effective in containing the number of COVID-19 cases, then the impact of restrictions on the third-quarter economic growth will be relatively limited.
"However, if the duration (of restrictions) is up to one month, then (emergency restrictions) will have a significant impact, especially on the level of consumption," she explained.
If consumption drops due to the impact of the emergency PPKM, then the decline will affect the outlook for consumption growth.
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"The level of public consumption is estimated to be corrected again, and the components that are potentially affected by the decline in basic non-consumption areas are transportation, communication, recreation, and clothing," she noted.
However, Sri Mulyani expects the investment rate to be stable, as the restrictions allows construction operations on grounds that health protocols are stringently imposed. Meanwhile, exports are also expected to maintain high growth in line with the export-import performance until May 2021.
As for the second quarter, the finance minister has projected relatively good economic growth, and it is not affected by the surge in COVID-19 cases since the increase in new cases occurred in the second and third week of June. Meanwhile, the new emergency PPKM will be implemented in early July.
"We saw a slight decline in June. However, we are optimistic that the decline is not much. Hence, for the time being, we estimate the outlook for economic growth in the second quarter to lie between 7.1 to 7.5 percent," the minister remarked. Related news: Wear masks, maintain safe physical distance during emergency PPKM