UI Rector Draws Analogy between Threat of Recession and People Recovering from Fever
DEPOK – (24/9/2020) Universitas Indonesia’s Rector Ari Kuncoro said there was an improvement in Minister of Finance Sri Mulyani’s economic growth projection for the third quarter, which would see Indonesia plunge into recession. This means the projection for the third quarter was better than the second quarter. “Recession is like a fever,” Ari told Tempo in Jakarta on Wednesday, 23 September 2020.
He drew an analogy between the trend of economic improvement in the third and second quarters and a fever. Initially, when a person develops a fever, the body temperature rises to 40 degrees Celsius. On the next day, the temperature drops to 38 degrees Celsius. According to Ari, the person still has a fever but his/her temperature has dropped. Ari said this is what happening to Indonesia’s economy.
Last Tuesday, Sri Mulyani projected that the economy could shrink to minus 2.9 percent in the third quarter. The figure was an improvement from the second quarter, which was minus 5.32 percent.
Ari mentioned several variables for an economic recovery. First, Indonesia’s manufacturing Purchasing Manager’s Index (PMI) has increased from 48.6 to 50.8, indicating an expansion as it shows that manufacturers buy production needs for future rather than current need. “This means expansion is underway,” said Ari.
Second, the Consumer Confidence Index (CCI) has increased from 86.2 to 86.9. Although the increase was slight, Ari said the indicator showed that people have started to buy more daily staples.
However, Ari said there are still several issues to be addressed, including spending by the middle-and upper-income groups. Today, they save money they usually spent on shopping and travel.
Ari called on them not to become too frugal and to continue to spend money because excessive fear of recession will curb spending, hampering economic revival. “So, frugality is the root of recession,” he said.
In a similar tone, Center of Reform on Economics (CORE) Indonesia Research Director Piter Abdullah also urged people not to panic or worry too much and to continue their normal activities.
“Recession is just a label,” said Piter. Recession is not a completely difference situation but a label for a condition that has occured in the past six months. However, Piter suggested that low- and middle-income earners who barely get by to avoid overspending. “It’s better to save money for a rainy day” he said. (hjtp)