Projected slower economic growth caused by the COVID-19 pandemic is expected to worsen Indonesia’s struggle to promote inclusive development in the country, according to a National Development Planning Agency (Bappenas) official.

The government with SMERU Research Institute measure the inclusiveness of growth based on 21 indicators, such as employment opportunity, inequality, contribution of women’s income and poverty rate. The result is that the country’s score on the Inclusive Economic Development Index has been stagnating at 5.75, which actually qualifies as moderately satisfying, since 2017.

“The COVID-19 pandemic has hit household consumption and lowered industrial output, which in turn has affected the indicators to measure inclusive economic growth,” Bappenas expert staff member for economic and financing synergy Amalia Adininggar Widyastuti said in an online talk on Wednesday.

Statistics Indonesia (BPS) data show that household spending, which accounts for more than half of the country’s gross domestic product (GDP), grew just 2.84 percent in the first quarter as the economy expanded 2.97 percent, the slowest since 2001.

The government now expects the country’s economy to grow 2.3 percent this year from 5.02 percent last year under the baseline scenario and even to contract 0.4 percent in the worst-case scenario.

The pandemic, Amalia said, was directly battering at least nine indicators in the index, especially employment opportunity, inequality and poverty. Without enough inclusiveness, the poorest 20 percent of the population were hit hardest by the pandemic with most of them lacking access to decent toilet and hand washing facilities, which are precisely the means to prevent COVID-19 contagion.

“Macroeconomic policies must be equipped with affirmative policies, increasing accessibility and industrial output policies,” Amalia said. The affirmative policies, she went on to say, were reducing poverty and inequality, encouraging productive women to have decent work and raising awareness on healthy eating and lifestyle.

“Inclusive economic growth with more equitable income distribution and lower poverty is more resilient to the kind of shocks caused by the COVID-19 pandemic,” she stressed.

In a recent research study, SMERU projected that 8.5 million people would fall into poverty this year as a result of the COVID-19 pandemic. The prediction means that the number of poor people will surge to 33.24 million, or 12.37 percent of Indonesia’s total population, a figure last seen in 2009.

BPS data from September 2019 show that 24.79 million Indonesians lived in poverty, equivalent to 9.22 percent of the total population.

“The Indonesian economy needs to recover [after the pandemic], that’s for sure, but efforts to reduce the country’s poverty rate have reversed by 10 years [...]. All of the difficult steps that have been taken will then have to be redone to return to the 9.22 percent level,” SMERU researcher Ridho Al Izzati said in April.

Source: The Jakarta Post – 14^th May 2020

Image by Nattanan Kanchanaprat from Pixabay