Corona pandemic has hit the world economy. In a meeting of the Commission XI of DPR in a video conference in Jakarta, Minister of Finance Sri Mulyani estimated the loss due to the pandemic to reach US $9 trillion or equivalent to Rp 134 thousand trillion globally.
The loss is calculated until 2021 (assuming an exchange rate of Rp 14,900 / US $). The Minister of Finance considered the loss was the impact of the contraction in world economic growth and various social conditions such as termination of employment.
This value is equivalent to the Gross Domestic Product (GDP) of Germany plus Japan. "So it means how powerful a pandemic in a short period of time is less than 1 quarter, sweeping the world economy," the Former Managing Director of the World Bank said.
The United States has just released data on gross domestic growth in the first quarter of 2020 minus 4.8% over the same period last year. While China previously recorded the economy in the first three months of this year minus 6.8%.
Sri Mulyani will be aware of the impact of the US and Chinese economy which fell sharply in the first quarter due to corona to the domestic economy. Economic growth in the United States and China fell sharply in the first quarter of this year due to the coronavirus pandemic.
The Finance Minister said the economic downturn in the two countries with the world's largest economy would have a significant impact on Indonesia. "So, this raises vigilance for us all because the impact is very deep and terrible in the economy, especially in the first quarter," said Sri Mulyani.
The Impact of Covid-19 on the Indonesian and Global Economy
According to Sri Mulyani, the global panic escalation was very high due to the corona pandemic, which caused an irrational reaction in the financial sector last month. Capital outflow from emerging market countries even reached US $100 billion or around 0.4% of gross domestic product.
While in Indonesia, foreign capital outflows from Government Securities reached more than Rp 120 trillion in March. "This has caused tremendous pressure and Bank Indonesia must overcome our exchange rate," he said. Thus, the stock market was deeply corrected due to the continued outflow of foreign capital.
Until April 24, Sri Mulyani revealed that developed countries' stock indexes were down 16.3% and emerging markets dropped 20%. Besides the financial markets, the impact of Covid-19 also caused commodity prices to fall. Noted, global oil prices have fallen 70% since early January.
If we look at the impact of Covid-19 on the real sector, Sri Mulyani revealed that this can be seen from unemployment that jumped very high. The US, which is the center of the world economy, claims unemployment has increased by 26 million in five weeks.
Not only in the US, Sri Mulyani said that Europe also faces enormous pressure due to the pandemic. The European Manufacturing Services PMI in April continued to contract at the lowest level since 2009. Business Confidence of Germany in low recorded. UK retail sales also contracted by 5.8%.
While in Asia, the Chinese economy in the first quarter of this year fell by 6.8%, a record low for almost three decades. In addition, China's retail sales in the first quarter fell by 18.9%. Japan's PMI in April also contracted to the lowest level since 2009.
Estimates of Indonesia's Economic Growth in the Pandemic Era
According to Sri Mulyani, the recovery of the Covid-19 pandemic which was still filled with uncertainty would’ve an impact on the global economy going forward. "So now the focus’s on how we can reduce and mitigate in this uncertainty because we never know Covid-19 will be finished when," she said.
The Finance Minister previously estimated the Indonesian economy could still grow 4.6% in the first quarter of this year. The impact of the coronavirus pandemic is only expected to be felt in the second quarter. But if it is not, Indonesia surely needs more time to recovery.
"In the first quarter, because there was still momentum for economic growth in February, we projected 4.5% to 4.6%," Sri Mulyani said. She hopes the pandemic can subside in the second quarter. If this happens, she estimates that economic recovery will occur in the third and fourth quarter of 2020.
