"We know that the Indonesian economy is supported more by domestic growth. Hence, this strategy to accelerate recovery will have a significant influence in driving domestic demand," Santoso remarked during an online discussion in Jakarta on Thursday.
The chairman of the OJK Board of Commissioners highlighted the need to pursue the step since Indonesia relies exceedingly on domestic consumption, so it is highly dependent on the recovery strategy adopted by the government.
Santoso detailed the ratio of government expenditure to Indonesia's gross domestic product (GDP): consumption expenditure, 32 percent; imports, nine percent; exports, 11 percent; gross fixed capital formation (PMTB), 17 percent; government consumption, three percent; and household consumption, 28 percent.
To this end, Santoso noted that Indonesia was relatively less affected by the global turmoil since 80 percent of the GDP came from domestic factors.
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He cited Singapore's recession in the second quarter of 2020 as was indicated by a nearly 41.2-percent contraction since the country was largely reliant on external factors, such as international trade.
"It is no wonder that various countries that are heavily dependent on international trade and services drop big like Singapore. Indonesia is 80-percent driven by the domestic economy," he pointed out.
In the meantime, Santoso has projected the Indonesian economy to decline in the second quarter and start to improve in the third quarter, although not yet significant.
"At the end of the year, we expect to be even more positive than this projection, and in 2021, we will rise faster because on a very low basis," he remarked.
According to Santoso, the figure for economic growth in 2020 is only a transitional period, so it does not become a standard reference since the strategy for recovery is the most crucial.
He also urged the government to continue to offer stimulus through the state budget to drive domestic demand, so that it has a positive impact on the national economy.
"Budget spending for various programs in the state budget until the end of 2020 can be realized because it will provide ammunition strong enough to encourage domestic demand," he expounded.
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