COVID-19 Crisis Drags Down Economic Activity, Pushes Up Poverty Across Indonesia
In mid-February 2021, Statistics Indonesia (in Indonesian: Badan Pusat Statistik, or BPS) released its latest poverty statistics. As expected, the data show a worrying rise in poverty across Indonesia, a development that is obviously related to the ongoing COVID-19 crisis. Governments’ self-imposed social and business restrictions (both at home and abroad), which aim at preventing the further spread of the virus, drag down economic activity in an unprecedented way.
Although a COVID-19 infection is harmless for over 98 percent of the population, it is a serious – even fatal – virus for those who have weakened immune systems due to old age or underlying illnesses. A rough estimate is that 0.5 percent of national populations have required medical treatment in hospitals due to COVID-19 related complications since the start of the pandemic around a year ago. To some that may seem like a small figure. However, in absolute terms, it puts great stress on hospitals (despite the fact that this 0.5 percent is spread out over some 12 months). Therefore, governments around the world have imposed full-lockdowns or semi-lockdowns to relieve pressures on hospitals. In the case of Indonesia the government deliberately refrains from using the word ‘(semi)lockdown’ but instead prefers to use the term ‘restrictions’ such as in Pembatasan Sosial Berskala Besar, abbreviated as PSBB, or more recently the phrase Pemberlakuan Pembatasan Kegiatan Masyarakat, PPKM, in an attempt to soften the psychologic impact in society. Some may argue that this approach backfires considering many Indonesians fail to comply with the hygiene protocols (such as wearing facemasks).
Nonetheless, as a consequence of these lockdowns or restrictions (both at home and abroad), economic activity (in the form of consumption, production, investment, and trade) has eased in an unprecedented fashion. And, this too is causing victims. For example, millions of Indonesians were laid off in 2020. At 7.07 percent in August 2020, Indonesia’s open unemployment rate soared to its highest level since 2011, with some 2.67 million people losing their jobs, while 1.7 million Indonesians were furloughed (and many others saw their wages being cut short).
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