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Corona alias Covid-19 virus has made the world economy helpless. Contractions are getting worse, even according to the World Bank, the worst since World War II.
Economic activity among developed countries drastically shrank by 7% in 2020. Emerging economic markets also shrank by 2.5%. This is the first time the economy of a developing country has contracted since 60 years ago.
Still from the World Bank, it is projected that per capita income will decline by 3.6% which will bring millions of people into extreme poverty.
The blow hit hardest in countries where the pandemic is the most severe and where there is a large dependency on global trade, tourism, commodity exports and external financing.
Indonesia is included if you see that. While the magnitude of the disturbance will vary from one region to another.
Not to mention disruptions in schools and access to primary health services tend to have a long-term impact on human resource development.
"This is a very in-depth view, with crises that tend to leave long-term scars and pose major global challenges," World Bank Vice President Ceyla Pazarbasioglu said in his research.
"It's an economic emergency. In addition, the global community must unite to find ways to rebuild a recovery that is as strong as possible to prevent more people from falling into poverty and unemployment."
Sri Mulyani Begins to Voice Recession Alert
Finance Minister Sri Mulyani Indrawati revealed that if the Large-Scale Social Restrictions (PSBB) had been relaxed but the public was not spending, aka shopping, Indonesia could fall into recession.
In the Ministry of Finance projection, with the handling costs of Covid-19 starting to be distributed and PSBB being relaxed but with spending support the third quarter and IV GDP could grow 1.4%.
"But if [in the assumption of not shopping] it could be -1.6%. It could technically be a recession. If the third quarter is negative and technically Indonesia could enter the recession zone," Sri Mulyani said in his conversation with the House of Representatives Commission XI, Monday (22 / 6/2020).
This scenario is included in the Ministry of Finance's projections. Where in the third and fourth quarters GDP will grow 1.4% to negative 1.6%. "While the outlook for the whole year -0.14 to 1 percent positive," said Sri Mulyani.
Sri Mulyani stressed that 2020 was an extraordinary year. Not in a positive context, but a very big challenge.
Due to the corona virus pandemic (Coronavirus Disease-2019.Covid-19), continued Sri Mulyani, the World Bank estimates that the global economy will contract or grow negative -5.2%. "The IMF (International Monetary Fund) we will see in the next few months, usually the July outlook. There must be a revision," he said.
Indonesia, added Sri Mulyani, was no exception. In the second quarter of 2020, the former World Bank Managing Director revealed that the national economic contraction will be -3.1%.
"In the second quarter there will be a contraction because the PSBB (Large-Scale Social Restriction) is carried out and contributes to a large economic growth. This will affect the second quarter which we estimate is -3.1%," he said.
If in two consecutive quarters the Indonesian economy is negative then it is definitely in a recession zone.
Deretean Ghost Proof That Begins To Appear:
Poverty Will Increase
The Directorate General of Fiscal Balance (DJPK) Ministry of Finance projects an increase in the number of poverty in Indonesia, due to the co-19 pandemic.
Director of the Special Transfer Fund of the DJPK, Putut Hari Satyaka said, the greatest increase in poverty rate will occur in Java, considering that Java is an epicenter of the distribution of co-19.
The increased poverty rate, said Putut, was the effect of disruption of national economic activity and the implementation of large-scale social restrictions (PSBB), which eventually made the economy in some regions sluggish.
Therefore, the potential social impact of decreasing economic growth has an impact on increasing the poverty rate. Putut said that the weight scenario will increase by around 1.16 million people, very heavy 3.78 million people.
Unemployment Goes High
Minister of National Development Planning / Head of Bappenas Suharso Monoarfa said, with this condition at this time, then unemployment could reach up to 12.7 million people next year.
"Because 2020 unemployment (projected) will increase by around 4 million to 5.5 million and if this happens then 2021 unemployment will reach 10.7 million to 12.7 million people," he said in a working meeting with the House of Representatives Commission XI, Monday (6/22/2020).
According to Suharso, the number of unemployed is much higher than the latest data. As of February 2020, the number of unemployed has reached 6.88 million people.
Thus, the government will now carry out various policies to reduce this. One of them is by providing assistance so that all industrial sectors can get back on track and also by relaxing large-scale social restrictions (PSBB).
Layoff Tsunami
Kadin Indonesia noted there were more than 6 million workers affected by layoffs and laid off due to co-19. The amount sent home is indeed greater to 90%.
However, the opening of the economy with the transition to the Large-Scale Social Restrictions (PSBB) has indeed had an impact on economic activity. However, economic activity has not been completely normal. Most workers even have to be laid off, aka unemployed at home.
Deputy Chair of Kadin Indonesia Shinta Widjaja Kamdani said during the pandemic according to association reports that the number of workers laid off and layoffs reached 6 million people. Although based on data from the Ministry of Manpower as of May 27, 2020, the formal sector that was laid off reached 1,058,284 workers and 380,221 laid-off workers were laid off.
"Association data has already been reduced to 6 million and layoffs, many of which are still being laid off," Shinta told CNBC Indonesia, quoted Tuesday (6/23).
He acknowledged that since the reopening of the economy in mid-June 2020 there was indeed an economic pulse that began to move, but still needed more time to get to normal conditions.
"After the easing of the PSBB, improvements were clearly there, before economic activity stopped, now it is slowly opening, only it cannot be immediate, slowly and gradually," he said.
He said from the demand side when the economy began to open it did not jump right away because it needed a process especially the non-primary sectors. While the retail sectors such as malls that have opened are not immediately stretched rapidly.
"Mall activities cannot be immediate. There is already severe cash flow, there needs to be help," he said.
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