Source: Bisnis.com | 14 Jun 2020

The International Monetary Fund (IMF) predicts the Corona virus pandemic (Covid-19) will cause a global recession this year. The situation could be worse than the 2008-2009 financial crisis.

In line with the IMF, the World Bank estimates that global gross domestic product (GDP) will contract by 5.2 percent due to Covid-19. If the forecast happens, it will record the deepest recession figures since World War II. So, can the Indonesian economy survive the storm of global recession?

Yusuf Rendy Manilet, an economist at the Indonesian Center of Reform on Economics (CORE), said there was no definitive definition of a recession. However, when referring to consensus, a recession means an economic slowdown (growth contraction) for two consecutive quarters.

“A recession also has the potential to occur when there is a decline in income, employment, manufacturing, and retail, because the decline in indicators has the potential to slow down economic performance,” Yusuf said when contacted by Bisnis, Sunday (14/6/2020).

Moreover, economic growth in the first quarter of 2020 was only 2.97 percent. This realization was lower than the same period last year (yoy), namely 5.02 percent.

Yusuf added that it is likely that economic growth will experience a deeper contraction in the second quarter of 2020 due to slowing growth in the manufacturing and retail sales index due to large-scale social restrictions (PSBB).

Furthermore, he assessed that the easing of the PSBB in several big cities would not necessarily move the economy to the level before the Covid-19 pandemic.

“If the slowdown in economic growth contraction occurs until the third quarter of 2020, then by definition Indonesia can already be said to be entering a recession,” he said.