Sunday, 16 May 2021 | 16:34 WIB

CORE Indonesia Predicts Indonesia Economy to Weaken Slightly in First Quarter

CORE Indonesia Predicts Indonesia Economy to Weaken Slightly in First Quarter (antara)

JAKARTA, NETRALNEWS.COM - The Center of Reform on Economics (CORE) Indonesia predicts the Indonesian economy to weaken around 0.5 to one percent in the first quarter of 2021. It also estimates a new acceleration to occur in the second quarter of 2021 with a positive growth of 4-5 percent.

"We predict full year with the current perspective of 3-4 percent. This is still below the Indonesian government's target," said Executive Director of CORE Indonesia Mohammad Faisal, on Tuesday (04/27/2021).

Faisal said the 3-4 percent growth projection, which is below the government's prediction of 4.3-5.3 percent, is due to household consumption recovery that has not accelerated properly.

He explained that the public's economic movement had increased, and even reaching closer to normal conditions before the pandemic. There had been a significant rise in activities in trading places, retail, restaurants, and cafes, among others.

On the other hand, if observed more deeply, it turns out that there are significant differences in public activities and long-distance transportation, such as using trains and airplanes, which are still a third of the initial conditions in 2020.

"The urge to go outside is still at close range. In fact, this significant increase in mobility has not significantly boosted household consumption," he said.

Faisal added that people's mobility, which seems to have started to recover over the past four months, has not been able to boost consumption optimally, and can be seen through several indicators.

As reported by Antara, Faisal said there was still deep contraction of actual real sales index as of the first quarter of 2021, namely 17 percent (yoy), and the movement in inflation, especially core inflation, had not increased until the beginning of the year.

"In fact, in March for the first time since early 2020 it entered the negative zone or deflation of minus 0.03 percent. So, there is no indication of a strong growth of consumption," he said.

Faisal continued that the same conditions can also be seen from the consumption of housing and property, which in fact, compared to before the pandemic, was still relatively low in growth, especially housing loans, apartment loans, and real estate.

Moreover, the increase in motor vehicle sales due to the relaxation of value added tax on luxury goods (PPnBM) which is estimated to grow 11 percent in April and May, is also not sustainable as it would dip in line with the decrease in the discount.

"This could push up sales this year, but when the discount period ends, we estimate it will return to its original state before the stimulus was given," Faisal explained.