Indonesia 3Q20 High Cost Economy

By administrator | November 11, 2020 | Finance.
Indonesia 3Q20 High Cost Economy
Illustration: Indonesia 3Q20 High Cost Economy

Indonesia 3Q20 High Cost Economy. Minister of Finance (Menkeu) Sri Mulyani Indrawati said Indonesia’s economy in the third quarter of 2020 improve compare to the previous quarter. However, this achievement comes with the consequence of higher costs. Namely an enlarging budget deficit.

Data from the State Budget (APBN) shows that during January-September 2020 the budget deficit reach IDR 687.5 trillion. This budget deficit is equivalent to 4.16% of Indonesia’s gross domestic product (GDP). When compare to the realization in the same period in 2019. Which was IDR 252.41 trillion.

The January-September 2020 deficit grew 170.2%. With this high cost. In additon to the Minister of Finance predicts that the economy in July-September 2020. It will be in the range of minus 2.9% to minus 1%. The hope is that it will be better than the realization of economic growth in April-June 2020 which contract by 5.32%.

As well as the third quarter is better than the second quarter. In the third quarter of recovery. The stabilization function of the state budget together with others is to overcome the blow to demand and supply. Said Sri Mulyani at the 2020 National Symposium on State Finance (SNKN), Wednesday (4/11).

High Cost Economy and State Budget

Indonesia 3Q20 High Cost Economy
Illustration: Indonesia 3Q20 High Cost Economy

It is expect that the economic growth in 2020 will be between 1.7% to minus 0.6%. So that in order to boost the economy in the remainder of this year, the government is commit to using its fiscal policies, including accelerating spending. To maintain the economy and the state budget.

We use fix instruments and even together with Bank Indonesia (BI) with monetary policies, as well as the policies of the Financial Services Authority (OJK). It is use to pump the economy up, said Sri Mulyani. Despite feeling that it has been optimal in handling Covid-19 in terms of health.

In addition to social, economic and financial sectors, it seems that the government has not been able to confirm the direction of economic recovery going forward. Although in the second semester of 2020 recovery is predict. Because, said Sri Mulyani, the movement for economic recovery, both Vshape, W shape, and U shape.

It will depend on the handling of the Covid-19 pandemic. This is happening in Western countries which were originally expect to experience a V shape, but may now be moving differently due to the second wave of the pandemic.

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